By Johann M. Cherian, Sukriti Gupta and Carolina Mandl

(Reuters) – U.S. stocks ended little changed on Wednesday in a session in which they struggled to find clear direction as investors digested the impact of two conflicting jobs data and a report that said President-elect Donald Trump was over the declaration of a national economic emergency, think about inflation.

“Inflation is the wild card in 2025. There are many things that potentially pose the risk of driving inflation back up,” said Charlie Ripley, senior investment strategist at Allianz Investment Management.

The minutes of the Federal Reserve meeting on 17-18 December showed on Wednesday that officials saw increasing risk that price pressures could persist as policymakers began to wrestle with the impact of measures expected from the new Trump administration.

Market sentiment was fragile after a CNN report said Trump was considering building the new tariff program using the International Economic Emergency Powers Act, which authorizes a president to manage imports during a national emergency.

The benchmark 10-year yield hit 4.73%, its highest since April 25, and fell slightly to 4.677% later in the afternoon.

Ahead of Trump’s inauguration later this month, concerns about potential markups on U.S. trading partners kept investors on edge as Trump’s policies, including mass deportations and tariffs, could increase inflationary pressures.

“If higher tariffs are imposed, it could have a short-term impact on inflation,” said Thomas Hayes, chairman of Great Hill Capital LLC. “The Fed will sit back and see whether he (Trump) imposes tariffs and, if so, how much of those potential inflationary impacts will be offset by government spending cuts.”

The Dow Jones Industrial Average rose 106.84 points or 0.25% to 42,635.20, the S&P 500 gained 9.20 points or 0.16% to 5,918.23 and the Nasdaq Composite lost 10.80 points or 0.06% to 19,478.88.

Eight of the 11 S&P 500 sectors posted gains, led by the healthcare index with a gain of 0.53%.

The Russell 200 index, which tracks domestically focused small-cap companies, fell 0.52%.

Megacaps were mixed, with Microsoft rising 0.52% while Alphabet and Meta fell 0.79% and 1.16%, respectively.

Investors also weighed in on an ADP National Employment Report that showed private payroll growth slowed sharply in December, although a separate Labor Department report said jobless claims fell for the previous week.

On Friday, the government releases its closely watched December employment report.

According to CME Group’s FedWatch tool, the Fed has kept interest rates on hold and traders now expect the first rate cut this year in either May or June.

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