S&P 500 clings to gain, Nasdaq turns negative and Dow hits pause on record-setting rally

U.S. stocks were giving back most of their earlier gains on Thursday afternoon, with the Dow Jones Industrial Average up less than 60 points after carving out a fresh record.

Optimism about the Federal Reserve’s interest-rate-cut projections delivered a day ago had been fueling a powerful rally.

How stocks are trading
The Dow Jones Industrial Average DJIA advanced 58 points, or 0.2%, to 37,148, after touching a record intraday high of 37,287.50.
The S&P 500 SPX edged up 2 points, or less than 0.1%, to 4,710.
The Nasdaq Composite COMP shed 29 points, or 0.2%, to 14,704.
On Wednesday, the Dow rose 1.4% to a record close of 37,090, the S&P 500 increased 1.4% and the Nasdaq gained 1.4%.

What’s driving markets
U.S. stocks were hitting pause on a powerful advance sparked a day ago when the Fed suggested interest rates have likely peaked in this cycle and penciled in 75 basis points of rate cuts in 2024.

“Today really is about the surprise delivered by the Fed yesterday,” said Sid Vaidya, U.S. wealth chief investment strategist at TD Wealth, adding that Fed Chair Jerome Powell didn’t push back, as expected, on market expectations of rate cuts next year.

Vaidya said it wasn’t a surprise that equities rallied and Treasury yields were falling significantly. But he also thinks optimism should be tempered, with the Fed indicating the first rate is likely to occur in the fall, while traders are expecting a pivot to cuts this spring.