Wall Street holds firmer in mixed trading a day after its worst drop in weeks

NEW YORK —  U.S. stocks held firmer Wednesday, a day after their worst drop in weeks.

The S&P 500 inched up 5.68 points, or 0.1%, to 5,211.49 The Dow Jones industrial average slipped 43.10 points, or 0.1%, to 39,127.14, and the Nasdaq composite added 37.01 points, or 0.2%, to close at 16,277.46.

GE Aerospace helped lead the S&P 500 with a jump of 6.7%. It was the second day of trading for the company after it split off its power and energy business, marking the end of the General Electric conglomerate. Cal-Maine Foods rose 3.6% after reporting stronger profit for the latest quarter than expected by selling a record number of eggs.

They helped offset an 8.2% drop for Intel, which disclosed financial details about key parts of its business for the first time, including its money-losing foundry business. Walt Disney Co. fell 3.1% after shareholders voted against installing an activist investor to its board who had promised to shake up the company to lift its stock price. The two companies’ drops were a large reason the Dow lagged behind other indexes.

Stocks have broadly slowed their roll since screaming 26% higher from November through March. Worries are rising that a remarkably resilient U.S. economy could prevent the Federal Reserve from delivering as many cuts to interest rates this year as earlier hoped. Critics have also been saying at least a pullback was overdue after stock prices had grown expensive by several measures.

The Fed has indicated it may still cut its main interest rate three times this year, which would relieve pressure on the economy. But Fed officials say they will do so only if more evidence arrives to show inflation is heading down toward their goal of 2%.

Fed Chair Jerome H. Powell reiterated that message in a speech Wednesday, spelling out the risks of cutting rates either too early or too late. “Given the strength of the economy and progress on inflation so far, we have time to let the incoming data guide our decisions on policy,” he said.

What has Wall Street worried has been a litany of reports showing the economy remains stronger than expected. That’s encouraging because it means the economy continues to avoid a recession, and it should provide support for corporate profits. But it could also add upward pressure on inflation and discourage the Fed from cutting rates.

Markets took encouragement from a report Wednesday morning showing that growth in construction, retail and other U.S. businesses cooled last month. The report from the Institute for Supply Management also said an index of prices paid was at its lowest level since March 2020, an encouraging trend for inflation.

That calmed Wall Street’s nerves after a report earlier in the morning that markets found more discouraging. It suggested stronger gains than expected in hiring within the private sector. That report from the ADP Research Institute said employers accelerated their hiring last month, when economists were forecasting a slowdown.

A more comprehensive report on the job market for March will arrive from the U.S. government on Friday, and it will probably be the week’s headline economic data.

Traders have already drastically reduced their expectations for how many times the Federal Reserve will cut interest rates this year, halving them from a forecast of six at the start of the year. That has them on the same page with Fed officials generally. Some investors, though, are preparing for two or even zero cuts this year because the Fed may not want to begin lowering rates too close to November’s election out of fear of appearing political.

But the Fed’s Powell said Wednesday that the central bank has the independence that “both enables and requires us to make our monetary policy decisions without consideration of short-term political matters.”

In the bond market, Treasury yields fell. The 10-year yield slipped to 4.34% from 4.36% late Tuesday. The two-year yield, which more closely tracks with expectations for Fed action, fell to 4.67% from 4.70%.

In stock markets abroad, European indexes were modestly higher. A report showed inflation in Europe cooled by more than expected in March, but analysts say that might not be enough to move up the European Central Bank’s first cut to interest rates.

Asian markets fell more sharply earlier in the day, following up on Wall Street’s losses from Tuesday. Indexes fell 1.7% in Seoul, 1% in Tokyo and 1.2% in Hong Kong.

Choe writes for the Associated Press. AP writers Christopher Rugaber, Yuri Kageyama and Matt Ott contributed to this report.