US stocks fell for a second session as investors reconsidered their bets on peak rates after economic data revealed persistent inflationary pressures and Fed officials remained hawkish.
The S&P 500 finished the day at its lowest point in nearly six weeks. The Nasdaq 100 index fell to its lowest level since January 30. Both indexes fell for the majority of the session after a manufacturing gauge improved for the first time in six months and investors reacted negatively to rising prices-paid measures.
Treasury yields continued to rise, with the 10-year yield breaking through the closely watched 4% level. Fed swaps are now pricing in a September peak policy rate of 5.5%, with some traders betting that the benchmark interest rate will reach 6%. The dollar index has risen the most since February 1st.
Investors were cautious on Wednesday after Fed officials reiterated their hawkish stance. Raphael Bostic of the Atlanta Fed has called for continued rate hikes to above 5% to prevent inflation from rising again. Meanwhile, Minneapolis Fed President Neel Kashkari expressed concern that there isn't much evidence that the central bank's rate hikes are slowing the services sector.