Wall Street drifts after the Fed indicates it may still cut rates twice this year

NEW YORK (AP) — U.S. stocks drifted after the Federal Reserve indicated it may cut interest rates twice this year, though it’s far from certain about that. The S&P 500 ended basically flat Wednesday. The Dow Jones Industrial Average slipped 0.1%, and the Nasdaq composite rose 0.1%. Treasury yields also wavered but ultimately held relatively steady after Fed Chair Jerome Powell said the central bank is still waiting to see what the effects of tariffs will be on the economy before deciding its next moves on interst rates. The price of oil swung in its latest yo-yo moves amid fighting between Israel and Iran.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

NEW YORK (AP) — U.S. stocks are drifting on Wednesday after the Federal Reserve indicated it may cut interest rates twice this year to give the economy a boost, though it's far from certain about that.

The S&P 500 was 0.1% higher in late trading after flipping between modest gains and losses several times. The Dow Jones Industrial Average was up 24 points, 0.1%, with a little less than 20 minutes remaining in trading, and the Nasdaq composite was 0.3% higher.

Treasury yields also wavered but ultimately held relatively steady following the release of projections by Fed officials showing the median member still expects to cut the federal funds rate twice by the end of 2025. That’s the same number they were projecting three months ago, and it helped calm worries a bit that inflation caused by President Donald Trump’s tariffs could tie the Fed’s hands.

Cuts in rates would make mortgages, credit-card payments and other loans cheaper for U.S. households and businesses, which in turn could strengthen the overall economy. But they could likewise fan inflation higher.

So far, inflation has remained relatively tame, and it’s near the Fed’s target of 2%. But economists have been saying it may take months to feel the effects of tariffs. And inflation has already been feeling upward pressure recently from a spurt in prices because of Israel’s fighting with Iran.

Fed Chair Jerome Powell stressed on Wednesday that all the uncertainty surrounding tariffs means the median forecast for two cuts to interest rates this year could end up being far from reality. “Right now it’s just a forecast in a very foggy time,” he said

Fed officials are waiting to see how big Trump’s tariffs will ultimately be, what they will affect and whether they will drive a one-time increase to inflation or something more lasting. There is also still deep uncertainty about how much tariffs will grind down on the economy’s growth.

“Because the economy is still solid, we can take the time to actually see what’s going to happen," Powell said. "There’s a range of possibilities on how large the inflation effects and the other effects are going to be. We'll make smarter and better decisions if we just wait a couple months or however long it takes to get a sense of really what is going to be the passthrough of inflation and what are going to be the effects on spending and hiring and all those things.”

Adding to the uncertainty Wednesday were continued swings for oil prices. After topping $74 during the morning, the price for a barrel of benchmark U.S. oil dropped below $72 before settling at $75.14, up 0.4% from the day before. Brent crude, the international standard, rose 0.3% to $76.70.

Oil prices have been yo-yoing for days because of rising and ebbing fears that the conflict could disrupt the global flow of crude. Not only is Iran a major producer of oil, it also sits on the narrow Strait of Hormuz, through which much of the world’s crude passes.

Trump said on Wednesday that Iran has reached out to him and that it’s not “too late” for Iran to give up its nuclear program, though he also declined to say whether the U.S. military would strike the country.

“I may do it. I may not do it,” he said. “I mean, nobody knows what I’m going to do.”

On Wall Street, some alternative-energy stocks rose to recover a portion of their sharp losses from the day before, when worries flared about Congress possibly phasing out tax credits for solar and green energy sources. Enphase Energy climbed 3.7% to trim its loss for the week to 20.6%.

Nucor rose 3.8% after the steelmaker said it expects to report growth in profit for all three of its operating groups in the second quarter. It said it benefited from higher selling prices at its sheet and plate mills, among other things.

In the bond market, Treasury yields were holding relatively steady after a few wavers up and down.

The yield on the 10-year Treasury fell to 4.38% from 4.39% late Tuesday. The two-year Treasury yield, which more closely tracks expectations for what the Fed will do with its overnight interest rate, dipped to 3.93% from 3.94%.

The moves followed a mixed set of reports on the U.S. economy released earlier in the day. One said fewer workers applied for unemployment benefits last week, which could be an indication of fewer layoffs. But a second report said that homebuilders broke ground on fewer homes last month than economists expected. That could be a sign that higher mortgage rates are chilling the industry.

In stock markets abroad, indexes were mixed across Europe and Asia.

Tokyo’s Nikkei 225 rose 0.9%, and Hong Kong’s Hang Seng fell 1.1% for two of the bigger moves.

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AP Writer Jiang Junzhe contributed.