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NEW YORK: U.S. stocks fell in choppy trading on Wednesday as investors assessed the Federal Reserve's interest rate stance and a batch of soft earnings early in the financial reporting season.
Travelers tumbled 7.41% and was among the biggest drags on the S&P 500 and largest on the Dow Industrials after the insurance giant missed Wall Street expectations for first-quarter profit.
Also weighing on the benchmark S&P index after quarterly results were Prologis, with the warehouse-focused real estate investment trust dropping 7.19%, and Abbott Laboratories, which fell 3.03% after topping quarterly estimates but disappointing on its annual forecast.
After a rally in the last two months of 2023 that extended into the first quarter, equities have struggled with the S&P 500 registering its fourth straight session of declines. The index is on pace for its third straight weekly loss as investors have dialed back expectations for the timing and size of the Fed's rate cuts.
On Tuesday, U.S. central bank officials including Fed Chair Jerome Powell backed away from providing guidance on when rates may be cut, saying instead that monetary policy needs to be restrictive for longer.
"The markets are dealing with a couple things - inflation is hotter than most expect, rate cut expectations are coming down and we've had a ramp higher in geopolitical tensions, particularly out of the Middle East," said Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan.
"It's just an excuse for traders to kind of move to the sidelines and markets to kind of take a breath after a really, really strong five months of gains."
The Dow Jones Industrial Average fell 45.66 points, or 0.12%, to 37,753.31, the S&P 500 lost 29.20 points, or 0.58%, to 5,022.21 and the Nasdaq Composite lost 181.88 points, or 1.15%, to 15,683.37.
The four-session S&P 500 sell-off is the longest in just over four months, matching a four-day run of declines ended on Jan. 4.
Fed Board Governor Michelle Bowman and Cleveland Fed President Loretta Mester are scheduled to speak later in the day.
The Fed's Beige Book survey of economic activity showed a slight expansion from late February through early April and companies feared that progress in lowering inflation would stall.
After the market began to largely price in a June cut from the Fed earlier this year, expectations for a cut of at least 25 basis points have shriveled to 16.8%, and for a July cut to 46%, CME's FedWatch Tool showed.
Stocks pared losses as U.S. Treasury yields eased further from the previous day's multi-month highs following a strong auction of 20-year bonds, with the 10-year note last around 4.59%.
Among gainers, United Airlines surged 17.45% after it forecast stronger-than-expected current-quarter numbers, helping to boost the NYSE Arca airline index by 3.82%. its biggest daily percentage jump since Feb. 6.
JB Hunt Transport Services slumped 8.12% as the worst performer on the S&P 500 after the trucking firm missed Wall Street estimates for first-quarter results.
U.S. Bancorp dropped 3.61% after the lender cut its forecast for full-year interest income and reported a 22% fall in first-quarter profit.
On the NYSE declining issues outnumbered advancers by a 1.1-to-1 ratio and a 1.54-to-1 ratio on the Nasdaq.
The NYSE had 21 new highs and 103 new lows. On the Nasdaq, there were 27 new highs and 240 new lows.
Volume on U.S. exchanges was 10.8 billion shares, compared with the 11.05 billion average for the full session over the last 20 trading days.
(Reporting by Chuck Mikolajczak; Editing by Richard Chang)