The S&P 500 is stable as Wall Street tries to avoid a fourth day of losses

Stocks fell on Wednesday as Wall Street struggled to end a three-day losing streak and investors continued to digest inflation-fighting comments from Federal Reserve officials.

The Dow Jones Industrial Average fell 115 points, or 0.4%. The S&P 500 fell 0.3% and the Nasdaq Composite lost 0.4%.

All major averages are on track to end what has been a solid month for bearish stocks. The Dow Jones and S&P 500 are currently on track to end the month down about 3%. The Nasdaq is expected to end down about 4%.

Investors had been debating for weeks whether the economy was in a recession or heading into one, and many believed a recession would give the Fed reason to ease its rate hike plan. Powell, however, reiterated in his Jackson Hole speech on Friday that the central bank is committed to controlling inflation and will continue to raise rates even in a recessionary environment.

“Markets were banking on limited rate hikes and quick rate cuts,” said Brad McMillan, chief investment officer for Commonwealth Financial Network. “The speech was clear, however, that the increases will be bigger and the cuts more delayed than expected.”

The shares have sold off sharply since then. Adding to Powell’s comments, Cleveland Fed Chair Loretta Mester said Wednesday that she sees benchmark interest rates surging above 4% early next year, and Fed Chair of New York’s John Williams called for “a somewhat restrictive policy to slow demand.”

The selloff on Wall Street unfolded on Tuesday, with the Dow Jones Industrial Average slipping almost 1%. The Nasdaq Composite fell 1.1% and the S&P 500 fell 1.1%, dropping below 4,000 for the first time since late July. All major averages were on track to end August with losses.

“This volatility is really healthy and constructive,” Sanctuary Wealth Chief Investment Officer Jeff Kilburg told CNBC. “It doesn’t feel good, and the speed the Fed has injected into this process of de-risking has taken a lot of investors’ breath away, but… There are a lot of signs that are more optimistic than negative” – like rising Treasury yields, he said.

“For the market to go from 3,600 to 4,300 in 19 trading sessions, that’s not sustainable,” he added. “Seeing the market come back and the S&P 500 filling volume around 4,000 is really constructive and allows us to have a base taking another step higher against the backdrop of an earnings season that is better than expected and the consumer sentiment slowly picking up.”

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