By Damien J Trois and Alex Veiga
Stocks ended lower on Wall Street ahead of a key Federal Reserve interest rate decision. The S&P 500 fell 1.1% on Tuesday. The Nasdaq Composite and Dow Jones Industrial Average also lost ground. Treasury yields have mostly been higher. Traders await how high the Fed will hike rates at its meeting, which ends Wednesday. The Fed is raising the cost of borrowing on hopes that inflation will slow to the hottest in four decades. Traders fear the Fed could overshoot its target and slow down the economy enough to trigger a recession.
This is a breaking news update. Below is a previous story from AP.
Shares fell in Tuesday afternoon Wall Street trading ahead of a key Federal Reserve interest rate decision.
As of 3:37 p.m., the S&P 500 Index was down 0.9%. East. More than 90% of stocks and all sectors in the benchmark index lost ground as traders wait and see how far the Fed will hike rates at Wednesday’s meeting.
The Dow Jones Industrial Average fell 257 points, or 0.8%, to 30,763 and the Nasdaq fell 0.7%.
“The market is definitely in a worst-case scenario and you’re seeing a little bit of selling pressure,” said Paul Kim, CEO of Simplified ETFs.
Retailers, technology stocks, healthcare companies and banks were among the biggest losers in the market. Best Buy lost 4.1%, Microsoft lost 0.8%, Abbott Laboratories lost 1.6% and JPMorgan Chase lost 1.8%.
US crude prices fell 1.5% and energy stocks fell. Exxon Mobil fell 0.7%.
Shares of the smaller company declined more than the broader market. The Russell 2000 Index fell 1.4%.
Bond yields rose for the most part. The 10-year Treasury yield, which affects mortgage rates, rose to 3.56% from 3.52% at the end of Monday, trading at its highest level since 2011.
The 2-year Treasury yield, which follows expectations for Fed action, rose to 3.96% from 3.95% as of late Monday, hovering around its highest level since 2007.
Stocks are falling and Treasury yields are rising as the Fed has raised the cost of borrowing in hopes of curbing the hottest inflation in four decades. The central bank’s aggressive rate hikes have rocked markets as Fed officials have stressed their determination to keep raising rates until they are confident that inflation is under control. .
Fed Chair Jerome Powell warned explicitly in a speech last month that raising interest rates would “bring about some pain”.
“They have made every effort to signal that this will be a more aggressive move,” said Liz Young, SoFi’s head of investment strategy. “He’s clear as a bell, which is what they’re focusing on.”
The Fed is expected to hike its short-term interest rate for the third time by three-quarters a point at its meeting on Wednesday. That would raise the policy rate, which affects much consumer and business credit, to a range of 3% to 3.25%, a 14-year high, and above zero to start the year.
Wall Street is concerned that a rate hike could go too far, slowing economic growth and pushing the economy into recession. Those concerns are fueled by data showing the US economy is already slowing and warnings from companies about the impact of inflation and supply chain problems on their operations.
Ford fell 11.7% after cutting its third-quarter profit guidance because a parts shortage would leave 45,000 unfinished vehicles on its lots when the quarter ends Sept. 30. Last week, FedEx and General Electric warned investors of their losses. inflation driven.
The US is not the only one suffering from hot inflation or struggling with the fallout from efforts to combat high prices.
Sweden’s central bank hiked interest rates by a full percentage point to 1.75% on Tuesday, surprising almost everyone as it scrambles to bring inflation down from 9% in August.
Consumer inflation in Japan rose to 3% in August, the highest since November 1991, but was well below levels of over 8% in the US and Europe. The Bank of Japan is gearing up for a two-day monetary policy meeting later this week, although analysts expect the central bank to stick with monetary easing.
Next up are rate decisions from Norway, Switzerland and the Bank of England.
Markets in Europe mainly fell while markets in Asia rose.
Yuri Kageyama and Matt Ott contributed to this report.