U.S. stocks closed mixed on Wednesday as markets tried to recover from Tuesday’s broad-based selloff following Fed Chair Jerome Powell’s message that the central bank might go for more interest rate hikes in order to tame surging inflation than investors were earlier expecting. The Dow ended in the red but the S&P 500 and Nasdaq closed in positive territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) slid 0.2% or 58.06 points to finish at 32,798.40 points.

The S&P 500 gained 0.1% or 5.64 points to end at 3,992.01 points. Tech, utilities and real estate stocks were the biggest gainers, while energy stocks declined.

The Technology Select Sector SPDR (XLK) gained 0.8%, while the Real Estate Select Sector SPDR (XLRE) advanced 1.4%. The Utilities Select Sector SPDR (XLU) rose 0.8%. The Energy Select Sector SPDR (XLE) lost 1%. Seven of the 11 sectors of the benchmark index ended in positive territory.

The tech-heavy Nasdaq rose 0.4% or 45.67 points to close at 11,576 points.

The fear-gauge CBOE Volatility Index (VIX) was down 2.45% to 19.11. Decliners outnumbered advancers on the NYSE by a 1.02-to-1 ratio. On Nasdaq, a 1.14-to-1 ratio favored declining issues. A total of 10.3 billion shares were traded on Wednesday, lower than the last 20-session average of 10.90 billion.

Markets Attempt to Digest Powell’s Hawkish Comments

Stocks took a hit on Tuesday following Fed Chair Jerome Powell’s hawkish comments that suggested that the central bank is likely to go for more interest rate hikes in the coming months than earlier expected in its bid to tame surging inflation.

On Wednesday, Powell continued with his congressional testimony on the monetary policy for the second day. Powell said that the Fed hasn’t arrived at a decision on the size of the interest rate hike it plans to impose in its next meeting later this month.

“We have not made any decision about the March meeting. We’re not going to do that until we see the additional data,” Powell said clearing that the decision on how large the size of the interest rate hike needs to be made will be taken over the next two weeks and depends on additional economic data that will be released during this period.

“We will be guided by the incoming data and the evolving outlook,” Powell added.

Powell’s comments on Wednesday were less hawkish than Tuesday when he said that the Fed was ready to increase interest rates if economic data indicated that it would spike inflation.

This saw the 2-year Treasury yield cross the 5% mark to hit its highest level since 2007.

Investors tried to digest Tuesday’s comments, with stocks making a frail attempt to make a comeback. However, jobs data released on Wednesday showed private payrolls once again increased in February, which reignited fears of a steep rate hike by the central bank in its next meeting.

Technology stocks were the second-best performer that helped Nasdaq end in the green. However, energy stocks lost on Wednesday. Shares of Exxon Mobil Corporation (XOM Quick QuoteXOM - Free Report) declined 1.5%, while Chevron Corporation (CVX Quick QuoteCVX - Free Report) lost 0.6%. Chevron has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Economic Data

Payroll services firm Automatic Data Processing, Inc. (ADP Quick QuoteADP - Free Report) said that private payrolls jumped 242,000 in February, up from January’s revised 119,000, and surpassing analysts’ expectations of a rise of 205,000.

In other economic data released on Wednesday, the Labor Department said that job openings in the United States declined to 10.8 million in January from 11.2 million in December.

According to the Fed's Beige Book survey, the general level of economic activity in the United States improved somewhat in early 2023, despite persistent inflationary pressures.