By Yasin Ebrahim

Investing.com – The S&P 500 cut losses Wednesday, led by a turnaround in tech as investors continued to buy the dip in growth sectors of the market.

Although the index rose 0.2% intraday, it was down almost 1% during the day. While the Nasdaq was unchanged, it gained 0.4%.

After starting the session with losses, tech turned on its heels and helped the market reduce them. A slew economic data that was positive as well as signs of an increase in inflation raised concerns about the Federal Reserve taking a quicker monetary policy decision.

The Personal Consumption Expenditures price index, the Fed’s preferred inflation measure, was up 0.6% on October, below the 0.7% rate expected, but ahead of prior’s month 0.4%. That took the annualized rate for October to 5%, well above the Fed’s 2% target.

The labor market continues to show progress toward the Fed’s maximum employment goal as jobless claims fell to lowest level since 1969.

Wednesday’s Department of Labor report indicated that 199,000 applicants for unemployment insurance applied, a 71,000 decrease from last week’s revision of 271,000. This was far below the consensus of 260,000 claims.

Economists, however, shrugged off the huge drop in claims as a one-off, which “were pushed down by a seasonal adjustment quirk,” Pantheon Macroeconomics said.  “It will substantially reverse next week, with claims rebounding to about 250K.”

Even though oil prices lost ground, recent gains in energy stocks were offset by gains in the stock market.

Devon Energy (NYSE:), Diamondback Energy (NASDAQ:), Marathon Oil (NYSE) were the largest gainers.

Tesla (NASDAQ): meanwhile, moved away from session lows in an effort to help consumer discretionary stocks reduce losses after a retail-led slide.

Gap (NYSE 🙂 fell 25% following a reduction in its outlook for the full year. The retailer’s third quarter results were below Wall Street expectations due to rising costs and woes of supplier chains.

Nordstrom (NYSE) posted weaker than expected quarterly results. Rising labor costs impacted profit and sent its share price down 29%.

On the monetary policy front, the minutes of the Fed’s November meeting showed that some Federal Reserve policymakers were in favor of a faster pace of bond tapering to provide the central bank with plenty of room to hike rates amid concerns about inflation pressures. 

A sign yet another that Fed members have grown concerned about inflation is this: San Francisco Federal Reserve Bank President Mary Daly said Wednesday that she would be open to speeding up the pace of the Fed’s bond tapering if inflation remained elevated and jobs growth remained strong.