Stocks were muted on Wednesday as the S&P 500 Index trades near its all-time high as investors are bet on coming interest rate cuts and were encouraged by the ceasefire between Israel and Iran.
The S&P 500 (NYSE: SPY) slipped above the flatline intraday and is currently trading less than 1% below its 6,147.43 intraday record set on Feb. 19. The broader market benchmark is also near its all-time closing high of 6,144.15, making a stunning comeback from the deep losses it took after President Donald Trump initially unveiled his tariff policies -- the S&P dropped nearly 20% in April as investors fears the so-called "reciprocal" tariffs would cause a global recession.
The tech-heavy Nasdaq Composite (NASDAQ: QQQ) rose on Wednesday and is trading less than 1% from its record high reached back in December. The Dow Jones Industrial Average (NYSE: DIA), meanwhile, lost over 100 points as the market rotated into growth stocks.
Wall Street was encouraged on Tuesday after Federal Reserve Chair Jerome Powell told congressional lawmakers that the central bank could cut interest rates "sooner rather than later," but ultimately maintained his stance that any decision will be dependent on economic data and the fed is "well positioned to wait."
On Wednesday, Powell said in testimony before the Senate Banking Committee that there may be room for near-term rate cuts if the tariff impacts on inflation and broader economy remain temporary.
"It's a risk. We feel like, as the people who are supposed to keep stable prices for the benefit of the American people, we can manage risk too," Powell said. "That's all we're doing. We're not deciding what to do yet."
Separately, the Fed proposed easing a key capital rule for banks, known as the enhanced supplementary leverage ratio, that was imposed after the 2008 financial crisis in effort to stabilize the nation's banks. The central bank's broad opened the proposal for public comment for the next 60 days.
"This stark increase in the amount of relatively safe and low-risk assets on bank balance sheets over the past decade or so has resulted in the leverage ratio becoming more binding," Powell said in a statement. "Based on this experience, it is prudent for us to reconsider our original approach."
In its current draft form, the measure would reduce the top-tier capital banks must hold by 1.4%, and lower capital requirements to a range of 3.5% to 4.5% from the current 5%.
On the earnings front, FedEx (NYSE: FDX) shares slipped on Wednesday after the delivery giant reported better-than-expected fourth-quarter earnings after market on Tuesday as the company gave mixed current-quarter guidance.
FedEx notably achieved its $4 billion cost-cutting goal "in face of ongoing headwinds," according to CEO Raj Subramaniam, and plans to slash another $1 billion throughout its upcoming fiscal year.
"Looking ahead, I'm confident that our transformation initiatives, which are focused on integrating our networks and further reducing our cost-to-serve, will create meaningful long-term value," Subramaniam said in a statement.
In corporate news, shares of BP (NYSE: BP) popped on Wednesday after the Wall Street Journal reported that Shell (NYSE: SHEL) is in early talks to acquire the oil giant. BP currently has a market capitalization of about $80 billion, with the potential deal representing the industry's largest since Exxon's (NYSE: XOM) purchase of Mobil for $83 billion.
Mastercard (NYSE: MA) announced Wednesday it is joining the Global Dollar Network stablecoin network founded by blockchain company Paxos. The payments giant is also adding support for PayPal's (NASDAQ: PYPL) and Fiserv's stablecoins, and will continue to supply Circle's (NASDAQ: CRCL) USDC.
"Each wave of payments innovation has reaffirmed a simple truth: Consumers and merchants adopt solutions that are convenient, secure and dependable," said Jorn Lambert, chief product officer at Mastercard, in a statement. "We don't see stablecoins disrupting this dynamic -- in fact, they reinforce it."
"That's why we're bringing our expertise, unparalleled network, state-of-the art services and leading partnerships to bear to integrate stablecoins into the financial mainstream with a vision of making them as seamless and ubiquitous as traditional forms of payment," Lambert added.
Looking ahead, market participants will continue to monitor the latest geopolitical developments from the Middle East ahead of key inflation and consumer sentiment data slated for release on Friday.