US stocks pared gains as investors remain cautious

Stocks pared earlier gains and closed lower on Wednesday, a day after Wall Street snapped a three-day losing streak.

The Dow Jones Industrial Average fell 234.21 points, or 0.6%, while the Nasdaq Composite and the S&P 500 closed down 1.05% and 0.77%, respectively.

The indexes started the day higher, but began to lose momentum in afternoon trading. With investors still nervous after the recent sharp sell-off in global stocks, stocks pared gains after the Treasury auction. All three indexes then turned red, and losses deepened just before the close.

Major indexes rose on Tuesday — giving up some of their late-afternoon gains — a day after U.S. recession fears sparked a selloff in global markets. The Dow Jones Industrial Average closed up 293.66 points, or 0.76 percent, while the Nasdaq Composite and the S&P 500 ended up 1.03 percent and 1.04 percent, respectively.

The July jobs report has provided a reliable indicator of recession.

Tuesday's gains came on the heels of Wall Street's worst day since 2022. The Dow Jones had lost more than 1,000 points by Monday's closing bell as part of a selloff sparked by weak U.S. jobs data and concerns about a slowdown in the world's largest economy.

“While Friday’s employment report was disappointing, it wasn’t the only worrying economic indicator, it was the latest,” said Greg McBride, chief financial analyst at Wright Bank. “Add to the economic concerns the disappointing earnings, weak corporate outlooks, global turmoil and currency volatility, and you have a recipe for sudden volatility.”

Markets are awaiting more comments on monetary policy from U.S. central bank officials next week, in the run-up to an event in which Federal Reserve Chairman Jerome Powell is scheduled to speak in Jackson Hole, Wyoming.

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Japanese stocks continued their upward momentum, with the Nikkei 225 closing up 1.19%. The index on Monday had its worst day since the Black Monday crash of 1987, falling 12%.

In Europe, the Stoxx 600 rose 1.54% on Wednesday, while Britain's FTSE 100 and Germany's DAX also gained.

Reuters contributed to this report.