And the stakes were higher than Powell’s testimony

U.S. stocks struggled for direction during Wednesday’s trading session as two labor prints showed the labor market remained tight amid sticky inflation.

Wall Street is awaiting more testimony from Federal Reserve Chairman Jerome Powell, this time before the House Financial Services Committee.

The S&P 500 (^GSPC) was down 0.1%, while the Dow Jones Industrial Average (^DJI) was down 0.3%. Tech-heavy Nasdaq Composite (^IXIC) contracts declined near the flatline.

Bond yields have fallen along with a stronger dollar. The yield on the benchmark 10-year U.S. Treasury note fell to 3.92% on Wednesday morning.

U.S. stocks fell on Tuesday after Powell said during testimony to the Senate Banking Committee that interest rates could rise “more” than previously expected as the central bank continues an ongoing fight against inflation.

Powell’s comments on Capitol Hill prompted a 1.5% selloff in shares, according to JP Morgan’s trading desk. Tuesday’s losses eased across every sector, with financials and real estate posting the biggest declines for the day.

US Federal Reserve Board Chairman Jerome Powell testified before the Senate Banking, Housing and Urban Affairs Committee. (Photo by MANDEL NGAN / AFP) (Photo by MANDEL NGAN/AFP via Getty Images)

Treasury yields were higher, with the 2-year yield above 5%, while the 10-year and 2-year US Treasury yields inverted for the first time since September 1981. According to strategists at Deutsche Bank, reaching this level could have been an ongoing recession or within eight months at most.

“Powell’s speech indicates that the Fed will be heavily dependent on near-term data for upcoming rate decisions,” Michael Feroli, JP Morgan’s chief U.S. economist, wrote in a note Wednesday morning.

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“With January’s macro data mostly printed on the hawkish side, NFP Friday and CPI next Tuesday are the most important catalysts for the Fed’s decision between 25bp and 50bp,” Ferroli added.

However, on the economic data side, ADP’s monthly reading of private payrolls growth rose to 242,000 in February, beating consensus expectations for 200,000. ADP also tracked wage growth for retained workers, which fell to 7.2% last month, the slowest pace of gains over the past year.

“There is a tradeoff in the labor market right now,” said Nela Richardson, ADP’s chief economist. wrote in a press release. “We’re seeing strong hiring, which is good for the economy and workers, but wage growth is still high. A modest slowdown in wage increases, by itself, is unlikely to bring down inflation quickly.”

Meanwhile, the U.S. monthly international trade deficit widened to $68.3 billion in January, below the consensus deficit of $68.7 billion, as imports outpaced exports. According to the US Bureau of Economic Analysis and the US Census Bureau.

Another highlight Wednesday morning was the January report on the number of job openings, which grew to 10.82 million, up from 10.54 million. According to the Bureau of Labor Statistics.

Friday’s February jobs report will have more clues about the economy’s strength. Economists expect the economy to add 215,000 new jobs, a slower pace than January’s 517,000 job addition.

The unemployment rate is expected to hold steady at 3.4%. Another key aspect of the reading was wage growth, with average hourly earnings expected to increase by 0.3% and 4.7% over last year.

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In single-stock moves, Occidental Petroleum Corporation ( OXY ) was up nearly 2% Wednesday morning. A regulatory filing disclosed Warren Buffett’s Berkshire Hathaway bought nearly 6 million shares of the oil company in recent days, increasing its stake in the company to 200.2 million shares worth $12.2 billion.

CrowdStrike Holdings, Inc. ( CRWD ) shares rose 7% on Wednesday after the security software provider reported fourth-quarter earnings that topped analysts’ expectations and posted strong guidance for the fiscal first quarter.

Shares of Tesla ( TSLA ) fell nearly 2% as Berenberg analyst Adrian Yanoshik cut his rating, citing “misplaced fears of a price war — based on what appears to be acceptance by the market.”

Danny Romero is a Yahoo Finance reporter. Follow her on Twitter @daniromerotv

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