Stocks close higher as Wall Street awaits Fed speech

By STAN CHOE
AP Business Writer

NEW YORK (AP) — Stocks are closing higher as Wall Street recovered some of this week’s steep losses ahead of a highly anticipated speech by the Federal Reserve chair later this week. The S&P 500 ended 0.3% higher Wednesday. The Dow Jones Industrial Average and Nasdaq also inched higher. Trading has been quiet the last two days ahead of a speech on Friday by Jerome Powell. Investors hope he’ll offer clarity about where rates are heading. Treasury yields rose after a report showed orders for long-lasting goods were stronger in July than expected, excluding transportation.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story appears below.

Stocks are ticking higher Wednesday as Wall Street waits in its holding pattern ahead of a highly anticipated speech about interest rates scheduled for the end of the week.

The S&P 500 was up 0.4% after flitting between small gains and losses. The Dow Jones Industrial Average was 96 points higher, or 0.3%, at 33,005, as of 3:17 p.m. Eastern time, and the Nasdaq composite was 0.6% higher.

It’s setting up to be a second straight day of relatively modest moves for the market, but they follow some severe swings up and down over the prior weeks.

Stocks drove higher through the summer on hopes that inflation was near its peak and the Federal Reserve may hike interest rates by less aggressive margins than earlier feared. But recent comments by Fed officials have cooled such expectations, while discouraging reports on the economy have piled up to highlight the risk of a recession.

That’s why Wall Street’s focus is centered on Friday, when Fed Chair Jerome Powell will give a speech at an annual economic symposium in Jackson Hole, Wyoming. It’s been the setting for market-moving speeches in the past, which has investors hoping Powell will offer clarity on where rate hikes are heading. Will he be hawkish, which is what traders call a bias toward aggressive rate hikes? Or dovish, which is Wall Street-speak for easier conditions?

Brian Jacobsen, senior investment strategist at Allspring Global Investments, isn’t expecting Powell to be clearly one or the other.

“I don’t think he wants to come across as hawkish or dovish, maybe he wants to come across as chicken,” Jacobsen said, citing the many variables that could change the Fed’s thinking before its next meeting on rate policy in September.

Despite all the anticipation for Powell’s speech, Jacobsen said it may be a “nothingburger” with little to chew on, though the market could take that as a positive given some expectations for Powell to sound hawkish.

Higher interest rates slow the economy in hopes of undercutting inflation. But they also risk choking off the economy if done too aggressively, and they pull down on prices for all kinds of investments.

Treasury yields have been rising recently, partly on anticipation that the Fed will continue to lean toward raising rates aggressively to quash the worst inflation in decades. The two-year yield, which tends to track expectations for the Fed, rose to 3.37% from 3.30% late Tuesday.

The 10-year yield, which helps set rates for mortgages and many kinds of loans, rose to 3.11% from 3.05% after a report showed that U.S. orders for long-lasting goods were flat in July. After ignoring transportation, though, growth was stronger than economists expected.

In the stock market, Intuit rallied 4% for one of the larger gains in the S&P 500. The company behind TurboTax delivered stronger results for the latest quarter than expected and a forecast for revenue this upcoming fiscal year that topped some analysts’ expectations.

On the losing end were several retailers, which are among the last companies to report how much profit they made during the spring.

Nordstrom sank 19.2% after it cut its financial forecast for the year, though it reported stronger profit for the latest quarter than expected. It’s the latest major retailer to say it’s struggling to keep up with its customers’ changing shopping patterns.

Not only are customers shifting their spending away from stores and toward travel and other experiences, the ones still coming in are seeing their buying power undercut by high inflation. That has the industry facing growing mountains of unsold inventory, with pressure hitting lower-income customers in particular.

Advance Auto Parts slumped 9.6% after its quarterly results fell short of expectations. The auto parts retailer said its do-it-yourself customers are getting squeezed by high inflation and gasoline prices well above where they were a year ago.

Markets overseas were mixed, with stocks in Shanghai sinking 1.9% but South Korean stocks up 0.5%.

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AP Business Writer Yuri Kageyama contributed.