Stocks drift, bond yields rise as markets await Fed
THIS IS A BREAKING NEWS UPDATE. AP’s previous story follows below.
NEW YORK — Wall Street headed for gains ahead of the market open on Wednesday as investors waited for the Federal Reserve to announce another expected interest rate hike.
Futures on Dow industrials and the S&P 500 gained 0.4% less than two hours before markets opened.
Equities in Asia closed mostly lower and European markets were largely in negative territory by midday.
Central banks in many countries are raising rates as inflation weighs on businesses and consumers. To counter this, regulators are gradually increasing borrowing costs that had reached record highs during the pandemic.
Fed policymakers are expected to raise the U.S. central bank’s benchmark rate by twice the usual amount this week, stepping up their fight against inflation which is at its highest level in four decades. The Fed has already raised its overnight rate once, the first such increase since 2018, and Wall Street expects several big increases in the coming months.
“All eyes are on the FOMC meeting and a rate hike is a given,” Clifford Bennett, chief economist at ACY Securities, said in a commentary.
The German DAX oscillated between small gains and losses, while the CAC 40 in Paris lost 0.5% and the British FTSE 100 lost 0.4%.
In Asian trading, Hong Kong’s Hang Seng fell 1.1% to 20,861.27 while Seoul’s Kospi lost 0.1% to 2,677.57. Australia’s S&P/ASX 200 fell 0.2% to 7,304.70.
The Indian Sensex fell 1% to 56,425.88. Taiwan’s benchmark rose and most other regional markets were closed, including those in Japan and mainland China.
Higher lending rates could dampen economic growth as they come at a time when soaring prices are squeezing consumers’ ability to spend.
Market participants could do good business assuming the rate increase has already been priced in, Bennett said. But he added that “this excludes the continued shock to consumers and particularly mortgage holders that will ripple through the economy in an accelerated fashion. This process of ‘pain’ will likely continue for one to three years in the future. real world. “
Added to this are the uncertainties brought about by Russia’s invasion of Ukraine.
Oil prices rose sharply as the European Union said it was preparing new sanctions on Russian energy over the war in Ukraine, although Slovakia and Hungary said they would oppose to such measures.
Newly proposed sanctions drafted by the EU’s executive arm, the European Commission, could include a phased embargo on Russian oil. This could weigh on supplies and push prices even higher.
Benchmark U.S. crude rose $4.57 to $106.98 a barrel in electronic trading on the New York Mercantile Exchange. It fell $2.76 on Tuesday.
Brent crude, the pricing basis for international oils, gained $4.53 to $109.50 a barrel.
Investors took a close look at the latest round of corporate earnings for more details on the impact of inflation on business and consumer activity.
They also receive updates on the labor market, which was slow to recover from the pandemic initially, but has strengthened. The Bureau of Labor Statistics reported Tuesday that employers posted a record 11.5 million job openings in March, meaning the United States now has an all-time high of two job openings for each unemployed person.
On Friday, the Labor Department is expected to report that the economy generated an additional 396,000 new jobs in April, according to FactSet. It would mark an unprecedented 12th consecutive month where hiring reached around 400,000 or more.
The US dollar fell to 129.94 Japanese yen from 130.11 yen on Tuesday night. The Euro rose slightly to $1.0529.