Wall Street calmed down in front of another testimony from Powell, the jobs data

(Reuters) – US stock indices struggled on Wednesday to determine direction as investors worried about a possible recession, a day after comments from Federal Reserve Chairman Jerome Powell boosted bets for a further rate hike.

Ahead of Friday’s important non-farm payrolls report, data showed private payrolls in the US increased more-than-expected in February, indicating continued labor market strength.

Powell told US lawmakers on Tuesday that the Federal Reserve will likely need to raise interest rates more than expected as it seeks to tame inflation, sending major US stock indexes down more than 1%, with the S&P 500 (.SPX) posting the biggest decline. in percentage. Within two weeks.

Traders sharply increased their bets that the US central bank will raise interest rates by 50 basis points later this month, with a near 70% chance of futures pricing in the money market.

Powell will testify again before the House Financial Services Committee at 10:00 AM ET.

A closely watched part of the US Treasury yield curve saw its deepest reversal in more than 40 years on Tuesday. This reversal is seen as a reliable recession indicator.

said Art Hogan, Chairman, Market Strategist at B Riley Wealth.

“Unless we get some data over the next couple of weeks, we don’t really know which way to go down. Unfortunately, the most important piece of data doesn’t come in until Friday, which is why we have a market that zigzags a bit.”

The Fed could raise interest rates to 6% and keep them there for an extended period of time to combat inflation, said Rick Reader, chief investment officer for global fixed income at BlackRock. Traders currently see the Fed funds rate peaking at 5.66% by September.

Labor Department data at 10:00 AM ET is likely to show that US job openings increased to 10.5 million in January after an unexpected rise to 11 million in the previous month.

At 9:38 a.m. ET, the Dow Jones Industrial Average (.DJI) was down 7.11 points, or 0.02%, at 32,849.35, the S&P 500 (.SPX) was down 1.51 points, or 0.04%, at 3,984.86, and the Nasdaq was down 1.51 points, or 0.04%, at 3,984.86. . The Composite Index (.IXIC) rose 5.46 points, or 0.05%, to 11,535.80 points.

Tesla Inc (TSLA.O) fell 2.6% after the US auto safety organization said it was opening a preliminary investigation into 120,000 2023 Model Y vehicles after reports of steering wheels falling off while driving.

Occidental Petroleum (OXY.N) rose 3.4% after Warren Buffett’s Berkshire Hathaway Inc (BRKa.N) raised its stake in the oil company to about 22.2%.

Declining issues outnumbered takers by 1.11 to 1 on the NYSE and 1.38 to 1 on the Nasdaq.

The S&P has not recorded any new highs in 52 weeks and eight new lows, while the Nasdaq has recorded 11 new highs and 57 new lows.

Additional reporting by Sruthi Shankar and Bansari Mayur Kamdar in Bengaluru Additional reporting by Amruta Khandekar Editing by Vinay Dwivedi

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