Wall Street remains stable just under recent highs

Market Update: Wall Street Moves Slowly

NEW YORK (AP) — On Tuesday afternoon, stocks on Wall Street hovered near break-even, with the index just below its recent peak.

The S&P 500 gained 0.1%, while the Dow Jones industrial average dipped 15 points, less than 0.1%, at 12:14 PM Eastern. The Nasdaq composite increased by 0.2%.

Boeing saw a rise of 1.8% after South Korea Airlines announced a $50 billion deal for over 100 aircraft. Meanwhile, Dish Network’s parent company, Ecostal, surged by 76.2% following AT&T’s announcement of a $23 billion agreement to acquire part of its wireless spectrum license.

In the bond market, Treasury yields remained mostly stable. The yield for 2010 slipped slightly from 4.28% late on Monday to 4.27%.

President Donald Trump’s ongoing dispute with the Federal Reserve has kept broader markets subdued. On Monday, he suggested he might remove Federal Reserve Governor Lisa Cook, to which she responded that she would stay.

This adds to the escalating tension over the Fed’s cautious approach to interest rates. The central bank has been careful since late 2024, wary of how Trump’s erratic tariff strategies might fuel inflation. Trump has also threatened to dismiss Fed Chairman Jerome Powell, although Powell’s influence is just one vote among 12 affecting policy decisions.

“We’ll keep an eye on the increasing political pressure on the Fed, but we hope decisions will continue to be made based on their mission in the near term,” stated Ulrike Hoffmann-Burchardi, Chief Investment Officer at UBS Global Wealth Management.

There’s still a prevailing expectation on Wall Street that the Fed will lower benchmark interest rates in its September meeting. According to CME Group data, traders see an 87% likelihood of a quarter-point cut.

The two-year Treasury yield, which is more in tune with the Fed’s expected actions, fell from 3.73% to 3.69% since late Friday.

The Federal Reserve has been addressing rising inflation by raising interest rates over the past few years. So far, they’ve managed to keep inflation in check, primarily due to strong consumer spending and a robust job market.

The Fed started shifting its stance by cutting benchmark rates in the latter half of 2024, as inflation neared its target of 2%. With growing concerns that Trump’s unpredictable tariffs could reignite inflation, they’ve opted to pause heading into 2025. While lower rates can encourage borrowing and investment, there’s always the risk that it could fuel inflation.

On Friday, the Fed and Wall Street will receive another update on inflation with the release of the Personal Consumption Expense Index. Economists predict that July’s inflation rate will remain around 2.6% year-over-year. Companies have been warning about increasing costs and pricing pressures due to tariffs.

Recently, the Fed has been more focused on the job market, which shows signs of softening. Alongside managing inflation, central banks also aim to foster a healthy job environment. Another important job market update is expected in early September, just ahead of the upcoming policy meeting.

Consumer confidence saw a slight dip in August, marking the eighth consecutive month of diminished optimism related to the job market. The small decrease reported by the conference committee’s monthly survey was fairly aligned with economists’ forecasts.