Dow falls slightly as investors weigh rising yields, chance of economic slowdown

Stocks were mixed on Wednesday as investors kept an eye on the bond market and signs of an economic slowdown.

The Dow Jones Industrial Average shed 114 points, or 0.3%. The S&P 500 dipped 0.2%, while Nasdaq Composite ticked up 0.2%.

The moves came as investors weighed updates from major companies and signs that economic growth may be slowing.

Overseas, Credit Suisse issued a profit warning for the second quarter, citing tighter monetary policy and the war in Ukraine. Target, which issued its own warning on Tuesday, was under pressure again on Wednesday after being downgraded to neutral from buy by Bank of America.

Meanwhile, the Atlanta Federal Reserve's GDPNow tracker now shows a growth rate of just 0.9% for the second quarter, down from 1.3% last week. Mortgage demand hit its lowest level in 22 years last week, according to the Mortgage Bankers Association.

As the Federal Reserve continues to tighten monetary conditions, the concerns about economic growth and corporate earnings could have a bigger impact on stocks, Allianz chief economic advisor Mohamed El-Erian said on "Squawk Box."

"The markets have been taking this news much better than they would have otherwise, but if I were fully invested right now, I'd take some chips off the table. I would wait for more value to be created," El-Erian said.

Action in the bond market may have hurt investor sentiment on Tuesday, as the 10-year Treasury yield jumped back above 3%.

The Nasdaq was bolstered by Chinese tech stocks, including a jump of more than 3% for JD.com, and Moderna, which rose 3% after its modified Covid-19 booster shot showed a stronger response to new variants.

Semiconductor stocks struggled on Wednesday, with Intel falling more than 4% after management comments at a Bank of America conference led a Citi analyst to predict a negative pre-announcement for the second quarter. Shares of Marvell Technology fell 2%.

On the earnings front, shares of Ollie's Bargain Outlet Holdings fell more than 1% in early trading after the discount retailer missed estimates for its first quarter. Campbell Soup, however, moved higher by about 3% after a stronger-than-expected quarterly report.

Investors are looking toward Friday's consumer price index reading for May. Many believe the print will be crucial for the path of Fed policy and whether the central bank will keep raising rates in half-point increments.

"We believe equity markets would likely rally at any hint of a pause in the expected rate-hike cycle. Positive consumer data could also help relieve some growth fears but, in some circumstances, could also further concerns that the Fed needs to get more aggressive to cool demand," Wells Fargo strategist Scott Wren said in a note to clients.

"Stock market rallies at this point will likely see headwinds and not meaningful follow through until there are clear signs the Fed is succeeding in controlling inflation," Wren added.