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The S&P 500 is stable as Wall Street tries to avoid a fourth day of losses

Stocks faltered on Wednesday as Wall Street struggled to end a three-day losing streak and investors continued to digest inflation-fighting comments from Federal Reserve officials.

The Dow Jones Industrial Average rose 2 points, turning on the flatline. The S&P 500 rose 0.1% and the Nasdaq Composite added 0.2%.

These moves put the Dow and S&P about 7% and 10%, respectively, above their mid-June lows. The Nasdaq is now more than 12% above its summer low.

What started out as a strong month for all three major averages is about to end on a weaker note. The Dow Jones and S&P 500 are currently on course to end August down about 3%. The Nasdaq is expected to end down about 4%.

Investors had been debating for weeks whether the economy was in a recession or heading into one, and many believed that an economic slowdown would give the Fed reason to ease its rate hike plan. Powell reiterated in his Jackson Hole speech on Friday, however, that the central bank is committed to controlling inflation and will continue to raise rates even in a recessionary environment.

“Markets were banking on limited rate hikes and quick rate cuts,” said Brad McMillan, chief investment officer for Commonwealth Financial Network. “The speech was clear, however, that the increases will be bigger and the cuts more delayed than expected.”

Shares have sold off sharply since Friday. Adding to Powell’s comments, Cleveland Fed President Loretta Mester said Wednesday that she expects benchmark interest rates to rise above 4% early next year. On Tuesday, New York Fed President John Williams called for “a somewhat restrictive policy to slow demand.”

As shocking as the latest rout may be for investors, some positive signs could emerge.

“This volatility is really healthy and constructive,” Sanctuary Wealth Chief Investment Officer Jeff Kilburg told CNBC. “It doesn’t feel good, and the speed the Fed has injected into this process of de-risking has taken a lot of investors’ breath away, but… There are a lot of signs that are more optimistic than negative” – like rising Treasury yields, he said.

“For the market to go from 3,600 to 4,300 in 19 trading sessions, that’s not sustainable,” he added. “Seeing the market come back and the S&P 500 filling volume around 4,000 is really constructive and allows us to have a base taking another step higher against the backdrop of an earnings season that is better than expected and the consumer sentiment slowly picking up.”