Stocks are giving up early gains as traders struggle to find their footing in 2023

Stocks were mixed and rates fell on Wednesday as investors digested key economic data reports that showed little change in the strength of the U.S. economy amid Federal Reserve rate hikes to curb inflation.

The Dow Jones industrial average fell 35 points, or 0.11%, erasing earlier gains after two economic reports. The S&P 500 and Nasdaq Composite fell 0.02% and 0.32%, respectively, reversing gains. Microsoft shares fell more than 5% after a downgrade from UBS, which underweights the broader market.

The November jobs and labor turnover report, or JOLTS, came in slightly better than expected, indicating continued labor market strength. The ISM manufacturing index was also roughly inline in December.

U.S. stocks started 2023 lower on Tuesday as rate worries, high inflation and recession fears dampened hopes that Wall Street could start the new year on a positive note. The S&P 500 and Nasdaq Composite lost 0.4% and 0.8%, respectively, while the Dow closed just below the breakeven. Major indices were also pressured by steep declines in shares of Apple and Tesla.

“U.S. stocks were unable to hold on to earlier gains as tight policy and recession fears were front and center for investors,” Onda senior market analyst Ed Moya wrote in a note to clients on Tuesday. “Discount buying sparked another short-lived bear market rebound.”

Investors will get more insight into what central bank members are thinking on Wednesday afternoon when the minutes of the central bank’s latest policy meeting are released. Earlier in the day, the jobs and labor turnover survey, or JOLTS, and ISM manufacturing data are due to be released.

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Friday’s December jobs report will also be closely watched as it is the last reading on the labor market before the central bank’s meeting in February.

“It’s too early to start betting on a Fed pivot this year, which should create this difficult environment for stocks,” Moya said.

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