US stocks pared earlier losses on Wednesday as traders assessed fresh economic data and commentary from Federal Reserve Chairman Kevin Warsh.
The S&P 500 Index closed 0.2% lower in New York, while the technology-heavy Nasdaq 100 Index dropped 1.5%, following the gauge's 28% rally in the three months through June.
Official data showed manufacturing activity in the US expanded for a sixth-straight month in June as the war-driven surge in input costs eased. Printing, electrical equipment and textiles were among the 14 manufacturing industries to report growth last month. However, three industries - paper products, furniture and wood products - contracted.
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"Overall, the report points to continued resilience in the manufacturing sector and supports our view that the US economy is reaccelerating, with growth remaining on track to reach approximately 2.4% this year," said Eugenio Aleman, chief economist at Raymond James.
Investor attention now likely shifts to Thursday's slate of employment data. Warsh has placed his focus squarely on inflation, which means June payrolls are "unlikely to shift interest rate expectations on their own," said Julien Lafargue, chief market strategist at Barclays Private Bank and Wealth Management. Furthermore, hiring linked to the FIFA World Cup is likely to distort the data.
"As a result, markets are likely to place greater weight on the June CPI report due on 14 July, as inflation data will offer a cleaner read on the economy," said Lafargue.
Jennifer Timmerman, senior investment strategy analyst at Wells Fargo Investment Institute, anticipates moderating job growth in the coming months as momentum for the economy slows in a lagged response to higher fuel costs and an end to tax refunds.
"Overall, we view the broad mosaic of jobs data as consistent with labor-market stabilization from weakness in late 2025, rather than renewed strength," said Timmerman. "Job gains remain narrowly based in health care and education, masking a tepid recovery in more economically sensitive sectors of the economy."
Meanwhile, at the European Central Bank's forum in Sintra, Portugal, Warsh said price risks have reduced in recent weeks. He also reiterated his determination to bring inflation back to the Fed's 2% target.
"Expectations of inflation over the first four weeks of this period have come down, inflation risks have come down," Warsh said.
The head of the central bank doubled down on a message from his first press conference in the role that it will deliver price stability. Warsh didn't cite the specific price indicators he was monitoring.
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Warsh "seems determined not to engage in a constant narrative about the direction of interest rates, but investors continue to hunt for any morsel of information," said Dan Coatsworth, head of markets at AJ Bell.
Iran LatestUS negotiators Steve Witkoff and Jared Kushner held positive discussions in Qatar and progress is being made on technical talks with Iran, according to a senior administration official, as the countries seek to turn an interim peace deal into a permanent end to the war. Working groups have been formed by Tehran to discuss the implementation of the current agreement and negotiate a final peace deal, though no talks have taken place yet, the state-run Islamic Republic News Agency reported, citing Deputy Foreign Minister Kazem Gharibabadi. "We are on the optimistic front on geopolitics," said Mohit Kumar of Jefferies. "It is not that we feel that we will have a comprehensive deal. It's likely to be more of a fudge. But as long as the Strait remains open and oil keeps flowing, market is likely to get de-sensitized around geopolitics." Among single stock moves, Meta Platforms Inc. surged 8.8% after Bloomberg News reported the Facebook parent is developing plans for a cloud infrastructure business that will sell access to artificial intelligence computing power and models. Nike Inc. shares rose 4.9% to erase an earlier drop as the sneaker maker was defended by analysts despite the weaker outlook. Caterpillar Inc. dropped 6.9% after Michael Burry said in a Substack post that he shorted the stock for the first time. General Mills Inc. advanced 8.5% after the packaged-food company reported adjusted earnings per share for the fourth-quarter that beat estimates. Sectors in Focus
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