U.S. stocks ended mixed Wednesday after a weak private payrolls report and a cautious economic outlook from the Fed’s Beige Book fueled concerns about growth, inflation, and tariffs.
The Dow Jones Industrial Average snapped a four day winning steak, closing lower by 91.90 points, or 0.22%. The S&P 500 was nearly flat, while the Nasdaq Composite gained 0.32% to end at 19,460.49.
Wednesday’s stock trading session sentiment was hit by a weaker-than-expected ADP employment report, which showed private payrolls rose by only 37,000 in May, notably below estimates. The reading comes ahead of Friday’s nonfarm payrolls data and may force the Federal Reserve to cut interest rates.
The yield on the 10-year Treasury dropped to 4.349%, its lowest since early May.
Fed’s Beige Book flags weakening growth, rising price pressures.
Further clouding the economic outlook, the Federal Reserve’s Beige Book, released on Wednesday morning, reported a “slight decline” in U.S. economic activity over the past six weeks. Hiring activity was mostly flat as business owners put off expansion plans due to elevated policy uncertainty from Washington and tariff-related cost pressures.
“All Districts reported elevated levels of economic and policy uncertainty,” the Fed noted. The report also cited “widespread reports of contacts expecting costs and prices to rise at a faster rate going forward.”
Tariffs were mentioned 122 times in the Beige Book, up from 107 in April.
Businesses across multiple regions, including New York and Philadelphia, reported rising input costs. Some firms are expecting reduced profit margins or passing along some additional cost to consumers to manage input spikes.
Boston, New York, and Philadelphia saw declines in activity. However, regions like Richmond, Atlanta, and Chicago reported modest growth. Overall, the Fed found that even in stronger districts, hiring activity was cautious.