U.S. Stocks Rebound From Morning Slump Amid Pre-Fed Market Caution

U.S. stocks initially dipped sharply in early trading on Thursday before staging a partial recovery, with the Nasdaq Composite briefly entering positive territory. The S&P 500 and Dow Jones Industrial Average, however, remained in negative territory by midday. The Nasdaq was up 0.1% at 17,210.71, having climbed from earlier lows, while the S&P 500 fell 0.2% and the Dow declined 0.5%. The morning selloff followed a pullback from record highs set in the previous session, as traders took profits. However, selling pressure eased as market participants adopted a wait-and-see approach ahead of the release of May inflation data from the U.S. Labor Department and the Federal Reserve’s monetary policy decision later in the week. Investors are closely watching for clues about the central bank’s stance on interest rates, despite expectations that rates will remain unchanged for now. Sector performance was mixed, with banking stocks leading the decline, as the KBW Bank Index dropped 2.0% to its lowest level in nearly two months. Gold stocks also fell 1.5%, despite a rise in the price of gold, while housing, steel, brokerage, and airline sectors posted notable losses. In contrast, most other major sectors showed more modest moves. Overseas markets were mixed, with Japan’s Nikkei 225 gaining 0.3% while China’s Shanghai Composite fell 0.8%. European markets were broadly lower, with the French CAC 40 down 1.2%, the U.K.’s FTSE 100 down 0.9%, and Germany’s DAX down 0.6%. U.S. Treasury prices rebounded slightly, with the yield on the 10-year note falling to 4.455%.