Stocks churn as Fed skip in sight, but no pivot

Stocks struggled for direction amid bets that even if the Federal Reserve pauses its rate hikes in September, policy will remain tight to prevent a flare-up in inflation. Treasuries fell.

A renewed jump in longer-term U.S. yields weighed on sentiment after a weak 30-year bond auction.

Wall Street’s risk-on bid also faded as Fed Bank of San Francisco President Mary Daly told Yahoo! Finance the central bank still has “more work to do.”

That’s even after data showed the core consumer price index had the smallest back-to-back increase in more than two years.

“The case is building for the Fed to keep policy rates unchanged in September,” said Seema Shah, chief global strategist at Principal Asset Management.

“While inflation is moving in the right direction, the still-elevated level suggests that the Fed is some distance from cutting rates.”

The S&P 500 closed little changed after a gain that topped 1% earlier Thursday. Nvidia, which has more than tripled this year, extended a three-day slide.

General Motors and Ford dropped on growing concern that demands from union leaders could send the automakers’ labor costs soaring.

Disney rallied after saying capital spending and outlays for movies and TV shows are coming in lower than projected.

Treasury 30-year yields climbed after a $23 billion auction was awarded the highest rate since 2011.

Two-year yields, which are more sensitive to imminent Fed moves, reversed an earlier slide. Benchmark 10-year yields rose about 10 basis points to 4.1%.

The dollar gained. Oil’s rally, driven by increasing signs of a tightening market, paused as technical barriers stalled further advances.