Wall Street Slips Again Wednesday

NEW YORK (AP) -- Wall Street is drifting Wednesday ahead of some potentially market-moving reports coming later in the day.

The S&P 500 was 0.5% lower in early trading, though still within 2% of its record set exactly two years ago. The Dow Jones Industrial Average was down 141 points, or 0.4%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.6% lower.

For a second straight day, some of last year's biggest winners were giving up some of their gains. Tesla fell 2.5% after soaring nearly 102% last year, for example. It and the other six "Magnificent 7" Big Tech stocks responsible for the majority of Wall Street's returns last year have regressed some following their tremendous runs.

The question hanging over the market is whether all the enthusiasm that helped stocks broadly rally for nine straight weeks into the end of last year was warranted. It was built on expectations that inflation has cooled enough for the Federal Reserve to not only halt its hikes to interest rates but to cut them several times this year. Hopes are also high that the economy can meanwhile escape a recession, even after the Fed hiked its main interest rate to the highest level since 2001.

Later this morning, reports could offer more clues about whether such hopes are warranted. One will show how many job openings U.S. employers were advertising at the end of November. Another will show how U.S. manufacturing, one of the hardest-hit areas of the economy, is performing.

The hope on Wall Street is that the overall economy is slowing from its rapid growth last summer in order to keep a lid on inflation, but not so much that it creates a recession.

Economists expect the report on job openings to show that employers advertised 8.76 million at the end of November, compared with 8.73 million at the end of October. The other report, meanwhile, is expected to show that U.S. manufacturing strengthened a bit but is still contracting.

In the afternoon may come the day's headliner, when the Federal Reserve will release the minutes from its latest policy meeting. It was at that meeting in December that policy makers hinted their dramatic campaign to hike interest rates to get inflation under control may be over. They also released projections showing their median official expects the federal funds rate to fall by 0.75 percentage points through 2024.

That sparked a big rally on Wall Street and bets that the Fed will cut rates by even more. Traders betting on a relatively high probability for at least 1.50 percentage points in total cuts, according to data from CME Group. The federal funds rate is currently sitting within a range of 5.25% to 5.50%.

Treasury yields climbed Wednesday to claw back some of their sharp drops since the autumn. The yield on the 10-year Treasury rose to 3.99% from 3.94% late Tuesday. That increases the pressure on the stock market, but it's still well below the 5% that it reached in October.

In stock markets abroad, indexes fell across much of Europe and Asia. Losses were particularly sharp in France, where the CAC 40 fell 1.7%, and in South Korea, where the Kospi sank 2.3%. Stocks in Shanghai were an outlier, rising 0.2%.