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Apple hits all-time high
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Chip stocks recover from session lows
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Annual banks stress test results due later
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Fed's Powell flags more rate hikes
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Dow off 0.3%, S&P up 0.06%, Nasdaq climbs 0.3%
(Updated at 1431 ET/ 1831 GMT)
By Sinéad Carew, Sruthi Shankar and Johann M Cherian
June 28 (Reuters) -
The S&P 500 and Dow were in the red on Wednesday on the prospect of further interest rate hikes after the Federal Reserve's chair Jerome Powell said that he did not see inflation falling to the central bank's target rate any time soon.
At a European Central Bank forum on Wednesday, Powell said the Fed will likely raise rates further and did not rule out a boost in the cost of borrowing at the next policy meeting scheduled for the end of July. He said he does not inflation reaching the Fed's 2% target "this year or next year."
"The concern is about Powell's comments that we're just not done with the rate hiking cycle, that inflation is still too strong ... the market has to accept that the Fed is not done hiking rates," said Phil Blancato CEO Ladenburg Asset Management adding that Powell is "not wrong."
Blancato also pointed to seasonal trends ahead of the July 4 U.S. Independence Day holiday "after an incredible first six months of the year for growth stocks" and said: "The market's more than happy to take a breather here."
The Dow Jones Industrial Average fell 100.71 points, or 0.3%, to 33,826.03, the S&P 500 lost 2.76 points, or 0.06%, to 4,375.65 and the Nasdaq Composite added 40.53 points, or 0.3%, to 13,596.21.
Still, Apple Inc hit an all-time high during Wednesday's session while Tesla Microsoft and Alphabet were also some of the S&P's biggest boosts.
"The market is very focused on the only real source of growth which is the technology sector and specifically the AI sector, which has raised the valuation of that vector significantly versus the rest of the market," said Michael Green, portfolio manager at Simplify Asset Management.
Still Chipmaker Nvidia was down 0.9%, having recovered from sharp losses earlier in the session after the Wall Street Journal reported the United States could impose new curbs on exports of artificial intelligence chips to China.
Wall Street had snapped a losing streak on Tuesday as upbeat economic data eased fears of an imminent U.S. recession, though it bolstered expectations that the Fed could hike rates in July.
Traders now see an 81.8% chance of the Fed hiking interest rates by 25 basis points to a 5.25%-5.50% range in July and expect the central bank to hold rates through the end of 2023, according to CMEGroup's Fedwatch tool.
Investors are awaiting the Personal Consumption Expenditures (PCE) index reading, the Fed's favored inflation gauge, initial jobless claims data and the final reading of first-quarter GDP later this week to assess the state of the U.S. economy.
The S&P banks index slipped 0.8% ahead of the Fed's annual stress test results after markets close on Wednesday. The test helps determine how much capital banks need to keep in reserve and how much they have for stock buybacks and dividends.
Netflix Inc, also one of the S&P's biggest boosts, climbed 3.9% as Oppenheimer raised it price target.
General Mills slid 4.7% after the packaged food maker forecast full-year profit below analysts' estimates.
Advancing issues outnumbered declining ones on the NYSE by a 1.08-to-1 ratio; on Nasdaq, a 1.13-to-1 ratio favored advancers.
The S&P 500 posted 39 new 52-week highs and 6 new lows; the Nasdaq Composite recorded 64 new highs and 112 new lows. (Reporting by Sinéad Carew in New York, Sruthi Shankar and Johann M Cherian in Bengaluru Editing by Vinay Dwivedi and David Gregorio)
