Stocks mixed as investors eye economy

U.S. stocks were mixed on Wednesday after markets hit record highs, as investors looked to upcoming data for clues on the health of the economy and the chances of another big interest rate cut.

The Dow Jones Industrial Average (^DJI) pared earlier gains to fall about 0.4%, while the S&P 500 (^GSPC) maintained its positive momentum, up about 0.1% following record closes for both major indexes. The technology-heavy Nasdaq Composite (^IXIC) rose about 0.4% after initially opening in the red.

The question now is whether the U.S. economy could find itself in a recession, with concerns raised by a surprisingly weak reading of consumer confidence. The debate is whether the Federal Reserve cut interest rates by a larger-than-usual 0.5 percentage point in response to the slowing economy, and what further tightening might mean for another expected deep rate cut.

Read more: What the Fed's rate cut means for bank accounts, CDs, loans, and credit cards

On the data front, new home sales rose. Decreased in August After a sharp increase the previous month as sky-high mortgage rates and expensive prices kept buyers mostly on the sidelines.

Still, mortgage applications 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 fell.

But the spotlight is firmly on Thursday's second-quarter GDP reading and Friday's crucial reading of the personal consumption expenditures index — the Fed's preferred gauge of inflation.

The parade of Fed spokespeople continues with an appearance by Fed Governor Adriana Kogler, whose comments will also be scrutinized for clarity on the size and pace of upcoming rate cuts when she appears later Wednesday.

Meanwhile, the support markets received from China's launch of a large stimulus package has faded amid growing doubts about the success of these steps in transforming its economy.