By Jack Pitcher and Shradha Dinesh
Strong manufacturing data and commentary from new Federal Reserve Chairman Kevin Warsh boosted economically sensitive stocks Wednesday.
At a conference in Portugal, Warsh dodged questions about whether an interest-rate hike is in the cards this month but said that inflationary risks have eased since the central bank's last meeting. That, combined with a fresh survey showing that factory activity continued to expand in the U.S. in June, appeared to leave investors feeling better about the state of the economy.
Financial, real estate, and consumer discretionary stocks, all of which do better when the economy is strong, outperformed on Wednesday. So did Facebook parent Meta Platforms, which jumped 8.8% on a news report that said it plans to build a cloud business to sell excess artificial-intelligence capacity.
A pullback in the red-hot shares of chip makers weighed on the Nasdaq, which fell 0.7%, and left the S&P 500 0.2% lower despite a majority of its sectors trading higher. Micron and Sandisk shares both dropped 11%, while Intel retreated 9%. The Dow Jones Industrial Average inched less than 0.1% lower from a record Tuesday.
The benchmark 10-year Treasury yield pared earlier gains after Warsh's comments, closing at 4.474%.
Looking ahead, traders will have their eyes on the June jobs report due Thursday morning. Economists polled by the The Wall Street Journal forecast that 115,000 jobs were added in June, though analysts warn the figure could be distorted by short-term hiring related to the World Cup.
The next reading of the consumer-price index, set for mid-July, is likely a more important factor in the Fed's next rate decision, said Julien Lafargue, chief market strategist at Barclays Private Bank.
"With the new Fed chair having placed the focus squarely on inflation, June payrolls are unlikely to shift interest rate expectations on their own," Lafargue said.
In earnings, Nike beat profit estimates but slashed its sales outlook after the closing bell Tuesday, blaming consumer jitters related to war and higher gas prices. Investors found enough to like in the mixed report, sending the beleaguered apparel-maker's shares 4.9% higher.
Write to Jack Pitcher at jack.pitcher@wsj.com and Shradha Dinesh at shradha.dinesh@wsj.com