Updated at 4:15 pm EST
Stocks ended higher Wednesday, while Treasury bond yields rose and the dollar eased against its currency peers, as investors continue to fret over the prospects of a protracted global slowdown while closely tracking comments from Federal Reserve officials ahead of its annual retreat in Jackson Hole later this week.
Bets on another 75 basis point rate hike from the Fed, following two similar increases in June and July, are essentially sitting at 54.5%, according to the CME Group's FedWatch tool, as investors see easing inflation pressures and weakening growth slowing the central bank's policy path.
That view was supported yesterday by data showing a big decline in economic activity over the month of August, with S&P Global's flash composite purchasing managers index hitting the lowest levels since May of 2020, an a massive slump in new home sales, which fell the most in six-and-a-half years.
Mortgage demand, as well, is retreating quickly, falling to the lowest levels in 22 years — down 83% from the same period last year — according to Wednesday data from the Mortgage Bankers Association.
Minnesota Fed President Neel Kashkari, however, said late Tuesday that his biggest concern was that "if we are wrong and markets are wrong and inflation is much more embedded, at a much higher level, than we appreciate, then we are going to have to be more aggressive" in bringing it back down.
The hawkish outlook is keeping the U.S. dollar elevated against its global peers, although the dollar index fell 0.01% in New York trading to change hands at 108.61. Treasury bond yields, which slipped lower yesterday following a solid $44 billion 2-year note auction yesterday, were back on the rise, with 10-year paper trading at a five-month high of 3.111%.
Global growth prospects continue to dim, as well, amid an energy crisis in Europe that is being exacerbated by disruptions in natural gas supplies from Russia and China's ongoing struggle to apply its 'zero Covid' policies on the world's second largest economy without tipping it into contraction.
In overseas markets, Europe's Stoxx 600 ended 0.16% higher in Frankfurt while overnight in Asia the region-wide MSCI fell 0.55% and Japan's Nikkei 225 ended 0.45% lower.
Global oil prices marched higher Wednesday as traders worried that a warning from Saudi Arabia earlier this week could lead to OPEC production cuts when the cartel meets early next month in Vienna.
WTI futures for September delivery, which are tightly-linked to U.S. gas prices, were marked $1.55 higher at $95.29 per barrel. Brent crude contracts for October, the global pricing benchmark, rose $1.38 to $100.61 per gallon.
The moves, in part, triggered the first overnight rise in domestic U.S. diesel prices since mid-June, according to data from the American Automobile Association, with the national average up half a cent at $4.977 per gallon.
On Wall Street, the S&P 500 ended up 0.29%, while the Dow Jones Industrial Average gained 59 points, or 0.18%, to 32,969. The tech-focused Nasdaq advanced 0.41%.
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Nvidia Corp. (NVDA) shares posted a modest gain ahead of its closely-watched second quarter earnings after the closing bell, with investors focused on the chipmaker's gaming sector outlook following a negative pre-announcement earlier this month.
Bed, Bath & Beyond (BBBY) shares surged 18% following a report that suggested the home retailer and meme-stock favorite had secured a loan deal that would shore-up its balance sheet.
Nordstrom (JWN) shares, meanwhile, tumbled nearly 20% after the struggling retailer slashed its full-year profit forecast following a mixed set of second quarter earnings and softening consumer spending heading into the summer months.
Updated at 4:15 pm EST