**Three major stock indices diverge, Nasdaq holds above 18,000 points;
**Mid to long-term U.S. Treasury yields rise, 10-year U.S. Treasury approaches 3.8%;
**Meta releases Quest 3S headset, hitting a new high during trading.
On Wednesday, U.S. stocks experienced mixed performance as investors awaited further clues on economic prospects and monetary policy. By the close, the Dow Jones Industrial Average fell 293.47 points, or 0.70%, to 41,914.75, the Nasdaq Composite rose 0.04% to 18,082.21, and the S&P 500 index dipped 0.19% to 5,722.26.
Market Overview
The U.S. Department of Commerce reported on Wednesday that new home sales decreased by 4.7% last month, with a seasonally adjusted annual rate of 716,000 units. The median price of new homes in August fell by 4.6% year-over-year to $420,600.
Data from Freddie Mac, a mortgage financing agency, showed that the average rate for a 30-year fixed-rate mortgage dropped from 6.20% the previous week to 6.09%, marking the lowest level since February 2023 and an eighth consecutive week of decline.
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Federal Reserve Governor Coghlan stated on the same day that she supported last week's decision to lower the benchmark interest rate by 50 basis points due to easing inflation and cooling labor market. "Although the Federal Open Market Committee's future actions will depend on the inflation, employment, and economic activity data we receive, if the situation continues to develop in the direction it has been so far, then additional easing may be appropriate."
Mid to long-term Treasury yields rose due to concerns that a loose financial environment could reignite inflation. The 2-year U.S. Treasury, which is related to the federal funds rate trend, increased by 1.5 basis points to 3.55%, and the benchmark 10-year U.S. Treasury rose by 5.5 basis points to 3.78%, hitting a three-week high. The market will closely monitor Federal Reserve Chairman Powell's speech in New York on Thursday and the latest jobless claims data.
According to the FedWatch tool from the Chicago Mercantile Exchange Group, the market expects the probability of a 50 basis point rate cut by the Federal Reserve in November to rise to around 60%. Stifel said in a report to clients on Wednesday: "Market participants seem to be increasingly divided on the scale of the Federal Reserve's next policy adjustment. Although the latest consumer confidence data has raised expectations for a second round (50 basis points) of rate cuts in November, the retreat of inflation expectations and the upward risks of the upcoming (Personal Consumption Expenditures) report have led others to bet on a smaller 25 basis point rate cut, or even a pause."Solita Marcelli, Chief Investment Officer for the Americas at UBS Global Wealth Management, wrote: "Stock markets tend to perform well during periods when the Federal Reserve eases policy while the U.S. economy is still growing. However, the degree of success of the Federal Reserve in guiding a soft landing for the U.S. will be crucial in determining the prospects of other asset classes."
On individual stocks, Nvidia rose by 2.2%, with its market value returning to $3 trillion.
Apple fell by 0.5%, with reports stating that sales of foreign brand smartphones, including iPhones, in China decreased year-on-year in August.
Meta rose by 0.9%, reaching a historical high during trading. The company unveiled its virtual reality (VR) headset device, the Quest 3S, with a starting price of $299. Additionally, Meta also released a multimodal large language model and prototypes for AR glasses.
Hewlett Packard Enterprise rose by more than 5%, with Barclays citing strong artificial intelligence data center demand as a positive catalyst, upgrading its rating to "buy."
General Motors and Ford fell by more than 4%, as Morgan Stanley downgraded its ratings for both automakers.
Crude oil weakened at the end of the day, with better-than-expected U.S. crude oil inventory data failing to offset market concerns about the demand outlook. The near-month WTI crude oil contract fell by 2.61%, closing at $69.69 per barrel, while the near-month Brent crude oil contract fell by 2.27%, closing at $73.46 per barrel.
International gold prices hit a new historical high. The COMEX gold futures contract for delivery in September on the New York Commodity Exchange rose by 0.30%, closing at $2,659.20 per ounce.
