Wall Street was little changed as investors assess the path of inflation

On By Littum

By Johann M Cherian, Sukriti Gupta and Carolina Mandl

(Reuters) – U.S. stocks ended little changed on Wednesday in a session that struggled for clear direction as investors digested the impact of two conflicting sets of jobs data and a report that said President-elect Donald Trump was considering a national economic emergency declaration on inflation.

“Inflation is the wild card in 2025. There are lots of things that potentially have a risk of moving inflation up again,” said Charlie Ripley, senior investment strategist for Allianz Investment Management.

The minutes from the Federal Reserve’s meeting on 17-18 December showed Wednesday that officials saw a growing risk that price pressures could remain sticky as policymakers began to grapple with the impact of policies expected from the incoming Trump administration.

Market sentiment was fragile after a CNN report said Trump was considering building up the new tariff program by using the International Economic Emergency Powers Act, which authorizes a president to manage imports during a national emergency.

Benchmark 10-year yields peaked at 4.73%, the highest since April 25, before retreating slightly to 4.677% later in the afternoon.

Ahead of Trump’s inauguration later this month, concerns about potential tariffs on US trading partners have kept investors on edge as Trump’s policies, including mass deportations and tariffs, could fuel inflationary pressures.

“If broader tariffs are implemented, it could have a short-term impact on inflation,” said Thomas Hayes, chairman of Great Hill Capital LLC. “The Fed will sit back and see if he (Trump) actually enacts punitive tariffs, and if he does, how much of the potential inflationary impact will be offset by the government spending cuts.”

The Dow Jones Industrial Average rose 106.84 points, or 0.25%, to 42,635.20, the S&P 500 gained 9.20 points, or 0.16%, to 5,918.23 and the Nasdaq Composite lost 10.80 points, or 0. 18.4% to 0.18.4%.

Eight of the 11 S&P 500 sectors advanced, led by the healthcare index up 0.53%.

The Russell 200 index, which tracks domestically focused small-cap companies, fell 0.52%.

Megacaps were mixed with Microsoft up 0.52%, while Alphabet and Meta fell 0.79% and 1.16% respectively.

Investors also assessed an ADP National Employment Report that showed private payrolls growth slowed sharply in December, although a separate Labor Department report said jobless numbers for the previous week fell.

On Friday, the government publishes its closely watched employment report for December.

The Fed has held interest rates steady, and traders now expect the first trim this year in either May or June, according to CME Group’s FedWatch Tool.