By Nathan Allen
U.S. stocks toed the flat line Wednesday, a day after snapping a weeklong winning streak amid lingering trade tensions and questions over the direction of Federal Reserve policy.
The Dow Jones Industrial Average edged up 21 points, or 0.1%, to 26072. The S&P 500 rose less than 0.1% while the technology-heavy Nasdaq Composite dipped 0.2%.
Equity markets in the U.S. had risen sharply in the prior week after Federal Reserve officials hinted that the central bank might lower interest rates to offset the negative effects of trade disputes. However, some analysts say markets may have overestimated the likelihood of such a rate cut, given recent positive economic data.
Ipek Ozkardeskaya, senior market analyst at London Capital Group, said heightened expectations of a rate cut may now force the Fed to act sooner than intended to avoid disappointing the market and driving up stock-market volatility over the summer.
Weak inflation is likely to fuel further speculation over the Fed cutting rates and may weigh on the dollar, some analysts have said. Inflation pressures remained muted last month.
U.S. consumer prices inched up in May, held down by a decline in energy prices. The consumer-price index, which measures what Americans pay for household goods and services such as toys or electricity, rose a seasonally adjusted 0.1% in May from the previous month, the Labor Department said Wednesday. Excluding volatile food and energy prices, costs were also up 0.1% on the month.
In Wednesday's action, shares of energy companies weighed on the S&P 500, with the sector losing nearly 1%. Shares of Dow components Exxon Mobil and Chevron dipped 0.8% and 0.6%, respectively.
The losses came as global oil benchmark Brent crude traded down 1.5% at $61.33 a barrel after data from the American Petroleum Institute showed that U.S. crude stockpiles climbed more than expected last week. The U.S. Energy Information Administration is due to release its own report later Wednesday, which will likely confirm the trend, according to Oanda senior market analyst Craig Erlam.
"Estimates suggest we may see a slight drawdown but that's very much at odds with the near-five million barrel build that API reported," he said.
The yield on 10-year U.S. Treasurys slipped to 2.136% on Wednesday from 2.140% on Tuesday. Bond yields move in the opposite direction to prices.
The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, rose 0.2% while gold rose 0.4% to $1,336.40 an ounce.
Elsewhere, the Stoxx Europe 600 fell 0.4%. In Asia, China's Shanghai Stock Exchange dropped 0.6% and Japan's Nikkei 225 fell 0.4%.
Jessica Menton and Joanne Chiu contributed to this article.