U.S. stocks retreated from record highs on Wednesday as investors waited for a reading from the Federal Reserve’s favorite inflation gauge that would provide clues about the path of interest rates.
Futures on the S&P 500 () fell about 0.2%, while futures on the Dow Jones Industrial Average () were little changed and reached new all-time highs for the indexes. Contracts on the tech-heavy Nasdaq 100 () fell 0.3%.
The mood is subdued ahead of the Thanksgiving holiday, with markets closed on Thursday and closing early on Friday. But the Fed is returning to the fore after being somewhat overshadowed by the debate over the impact of Donald Trump’s rate plans and cabinet choices.
The October print of his favorite inflation gauge, the Personal Consumption Expenditures Index, will be released Wednesday morning. The focus is on whether inflation has stalled, as some officials believe, and the minutes of the Fed’s latest meeting suggested a cautious stance on rate cuts.
Economists expect the annual core PCE – which excludes food and energy – to reach 2.8% in October, up from 2.7% in September. An outcome that meets these expectations will likely weigh on the chances of a rate cut in December. Traders currently see about a 34% chance that the Fed will hold rates steady at that meeting, up from about 24% a month earlier, according to the CME FedWatch Tool.
Updates on third-quarter GDP, durable goods data and initial unemployment claims are also on the economic agenda.
Questions about whether Trump’s agenda will drive up price pressures are also at play at the Fed, some analysts believe, although policymakers cannot speak openly about the debate.
Trump on Tuesday appointed Jamieson Greer – a veteran of his first term – as US trade representative. Since Greer was deeply involved in Trump’s original China tariffs, Wall Street is assessing what his role could mean for the major new tariffs promised on the U.S.’s major trading partners.
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