Stock rally loses steam as S&P 500, Dow slip from records

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US stocks lost steam on Wednesday after markets hit all-time highs, with the three major gauges closing mixed as investors debated the health of the economy and the chances of another jumbo rate cut.
The Dow Jones Industrial Average (^DJI) reversed earlier gains to close down about 0.7%, while the S&P 500 (^GSPC) also slipped into negative territory, declining around 0.2% on the heels of record closes for both indexes. The tech-heavy Nasdaq Composite (^IXIC) finished the day just above the flat line.
The question now becomes whether or not the US economy could find itself in a recession, with concerns fanned by a surprisingly weak reading on consumer confidence. The debate centers on whether the Federal Reserve lowered rates by a bigger-than-usual 0.5% in response to a slowing economy and what further malaise means for another hoped-for deep cut.
On the data front, new home sales declined in August following a sharp increase the month prior as ultra-high mortgage rates and lofty prices kept buyers mostly on the sidelines.
Mortgage applications, however, jumped to the highest level since 2022, according to MBA data released before the bell. The growth was driven by homeowners seeking to refinance loans as rates drop.
But the spotlight is firmly on Thursday's second quarter GDP print and Friday's crucial reading on the PCE index - the inflation gauge favored by the Fed.
On the data front, new home sales declined in August following a sharp increase the month prior as ultra-high mortgage rates and lofty prices kept buyers mostly on the sidelines.
Mortgage applications, however, jumped to the highest level since 2022, according to MBA data released before the bell. The growth was driven by homeowners seeking to refinance loans as rates drop.
But the spotlight is firmly on Thursday's second quarter GDP print and Friday's crucial reading on the PCE index - the inflation gauge favored by the Fed.
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