Major US indices pulled back further from Monday’s record closes following comments Tuesday from Federal Reserve chief Jerome Powell that US stocks are “fairly highly valued.”
“We’ve given up some ground today,” said FHN Financial’s Chris Low. “It really does look mostly.”
Briefing.com described Wednesday’s trading as a shift from the bargain-hunting impulse that has surfaced after other recent dips. But Wednesday’s losses were “modest in the scope of recent gains,” Briefing said in its note.
Following a mixed day on European stock markets, the broad-based S&P 500 finished down 0.3%.
Trade Nation analyst David Morrison characterised Tuesday’s selloff as shallow.
“The general feeling is… that any pullback is a buying opportunity,” he said.
A key driver of the rally has been expectations that the Fed will continue to cut US interest rates before the end of the year.
Investors are awaiting the release on Friday of the personal consumption expenditure (PCE) index, the Fed’s favoured gauge of US inflation, and key American jobs figures next week.
Crude oil prices rallied for a second day after European officials followed through on US President Donald Trump’s call in Tuesday’s United Nation’s adress to end energy imports from Russia.
The EU has already cut around 90% of its oil imports from Russia since Moscow’s 2022 invasion, and has announced a plan to phase out the remaining purchases by the end of 2027.
EU countries Hungary and Slovakia – both allies of Trump – still import Russian oil via pipeline, and are opposed to any moves to turn off the taps faster.
“We will, in due course, present what we have in mind on this,” EU spokesman Olof Gill said Wednesday.
Elsewhere, Alibaba CEO Eddie Wu’s unveiling of plans to ramp up AI spending by about US$53 billion provided a positive catalyst for tech stocks as well as the Hong Kong and Shanghai stock markets.
Alibaba shares surged more than 8%.
“The industry’s development speed far exceeded what we expected, and the industry’s demand for AI infrastructure also far exceeded our anticipation,” Wu told an audience at the firm’s annual developer conference in Hangzhou, China.
The Argentine peso rose sharply on Wednesday after Washington said it is in talks with Argentina for a swap line allowing the country access to billions of dollars.