U.S. stocks and major indices retreated on Thursday as the recent rally stalled, with investors digesting corporate earnings along with hawkish comments from Federal Reserve officials.

Wall Street’s latest rally came to an end on Wednesday as a series of Federal Reserve officials signaled that the Fed was more likely to hold interest rates this year amid high inflation.

They pointed to continued concerns about inflation as the biggest driver of steady rates, even as recent data illustrates some cooling regarding the labour market, which is another area of focus for the Fed.

These comments led to a rally in the dollar along with Treasury yields. The Dow Jones Industrial Average rose on Wednesday to its sixth straight session in positive territory, although it was a tepid day for the other Wall Street averages. The benchmark S&P 500 index closed the day unchanged, while the NASDAQ Composite, meanwhile, lost 0.2%.

More Fed speakers in the spotlight

The future path of Federal Reserve monetary policy continues to be the dominant influence on which markets rely, with more Fed officials offering insight into current thinking in the coming days.

San Francisco Fed President Mary Daly will speak on Thursday, followed by Chicago Fed President Austan Goolsbee on Friday. 

Also on Thursday, weekly jobless claims data will be released, although most of the economic focus will be on the release of consumer price data, a closely watched gauge of inflation, next week.

Inflation has largely stagnated above the 3% annual level, at a pace that policymakers still consider too far above their target to finish the job.

That said, in the coming months, policymakers will be faced with the difficult task of determining how much to risk with economic development and the labor market in exchange for a slight improvement in the pace of price increases.

Businesses disappointed by forecasts

At the company level, disappointing quarterly reports also dampened optimism. Chip designer Arm Holdings (ARM) and accommodation platform Airbnb Inc (ABNB) declined in the session before the market opened.

British chip designer Arm fell 8% as investors were disappointed by its profit estimates for the year. 

Although Arm’s March-quarter earnings beat forecasts, the low expectations raised questions about the extent to which the recent sharp plunge in valuations triggered by artificial intelligence was justified. 

Airbnb was also down 8% in the pre-market session on the back of its disappointing annual estimates.

By contrast, trading platform Robinhood (HOOD) advanced more than 5% after posting strong quarterly earnings supported by rising user numbers, while online dating app Bumble (BMBL) rallied 11% after announcing a sharp rise in profits.