Stocks flatline on Wall Street following labour market reports and Fed rate cut hint

US stocks steady: US stock markets showed little movement on Wednesday, following a mix of labour market reports and comments from a Federal Reserve official suggesting a potential interest rate cut.

The Labour Department reported a drop in US job openings to a 3.5-year low for July, signalling a continued softening in the labour market. This development could give the Fed more leverage to consider cutting rates in their upcoming meeting later this month.

Flat indices; sector shifts

The S&P 500, Nasdaq, and Dow Jones Industrial Average remained flat amidst volatile trading. Utilities stocks saw gains, while energy and healthcare sectors were a drag. Nine out of the eleven S&P 500 sectors experienced declines.

“Even though the index remains flat or down slightly, the market is actually up. Large-cap tech companies often skew the data, driving overall performance,” Eric Beyrich, co-chief investment officer at Sound Income Strategies highlighted.

Nvidia shares saw a minor uptick of 0.2% after a significant $279 billion market value drop the previous day. The US Department of Justice has issued a subpoena to Nvidia, intensifying its antitrust investigation into the company.

Meanwhile, other major tech stocks faced losses, with Apple down 1% and Amazon falling 1.8%. Tesla saw a near 5% rise.

Fed's Bostic warns on rates

Atlanta Fed President Raphael Bostic stressed that the central bank should avoid keeping interest rates high for too long, as it could adversely affect employment. He cautioned that waiting for inflation to hit the Fed's 2% target before reducing rates could lead to unnecessary economic pain.

On Tuesday, Wall Street indexes experienced their largest one-day decline since early August, driven by a sell-off in technology stocks at the start of September, a historically weak month for equities.

Beyrich commented on the rise in utility stocks, stating, “Weak job data strengthens the argument for a rate cut by at least 25 basis points when the Fed meets in a few weeks.”

The Dow Jones Industrial Average edged up by 3.38 points, or 0.00%, to 40,936.13. The S&P 500 fell by 5.11 points, or 0.09%, to 5,523.82, and the Nasdaq Composite dropped by 1.55 points, or 0.00%, to 17,135.93.

The Philadelphia SE Semiconductor Index recovered 0.72% after a sharp decline the previous day. Advanced Micro Devices rose 3.5% following the appointment of former Nvidia executive Keith Strier as senior vice president of global AI markets.

In contrast, Zscaler's shares plummeted nearly 18% after the company forecasted lower-than-expected revenue and profit for fiscal 2025. Dollar Tree's stock fell 24% after the discount retailer revised its annual sales and profit projections downward.

(With Reuters Inputs)