The stock market held close to record highs on Tuesday, as investors’ attention turned to Wednesday’s announcement from the US Federal Reserve.
In the morning exchanges, the
Dow Jones Industrial Average
was up 40 points, or 0.1%, after the index rose 94 points on Monday to close at 35,913.
was up 0.2%, and the
added 0.1%. All three indices ended Monday at new records.
The latest meeting of the Federal Open Market Committee (FOMC), the Federal Reserve’s monetary policy body, begins on Tuesday and ends Wednesday with a statement from Fed Chairman Jerome Powell.
The central bank is widely expected to announce that it will start slowing or reducing its monthly asset purchase program in the era of the pandemic, which adds liquidity to markets. The Fed bought $ 120 billion in bonds a month to keep their prices high and yields low. Now the markets expect the Fed to cut these purchases by about $ 15 billion per month. Faster reduction could be bad for inventory.
Markets will also be listening for clues as to when the central bank may start raising short-term interest rates. Recently, economic growth has slowed, while inflation has taken off. If this continues and the Fed needs to raise rates as soon as possible, stocks could sell off.
“Will the central bank change its widely telegraphed policy that it intends to keep the overnight rate unchanged until mid-2023 or change its outlook to align more closely? on the stairs?” wrote Kent Engelke, chief economic strategist at Capitol Securities Management. Markets, in this case, are worried that the Fed will raise short-term rates as soon as possible, with the 2-year Treasury yield hitting 0.48% from 0.21% at the end of September before the Fed makes an announcement. .
The Royal Bank of Australia entered central bank decision week, announcing on Tuesday that it would tighten monetary policy and abandon its target of keeping the three-year bond yield at 0.1%. There will also be an announcement Wednesday from the Bank of England.
The stock market seems to be waiting for the Fed. Movements in the index are slight, with just over half of S&P 500 stocks in the red, according to FactSet. There was little economic data released on Tuesday and the earnings season is drawing to a close, with just 49 companies, or 5% of the S&P 500 market cap, reporting that day, according to Credit Suisse.
Elsewhere, the Organization of the Petroleum Exporting Countries and its affiliates – a group that includes Saudi Arabia and Russia – are meeting amid skyrocketing energy prices. Futures for the benchmark U.S. crude index, West Texas Intermediate, were trading at around $ 84.30 a barrel on Tuesday, near annual highs.
But prices of other commodities have fallen, as Chinese iron ore futures plummet amid slowing Chinese steel production. China iron ore futures for November fell more than 6% on Tuesday – down almost 20% in the past five days alone – while contracts for December deliveries fell. fell 5.7%. Steel production fell 2% in the last third of October to its lowest levels since March 2020, according to data from Chinese market intelligence group Mysteel.
Overseas, Tokyo’s Nikkei 225 fell 0.4%, slashing its gains after a rally on Monday encouraging the weekend’s election results. In London, the FTSE 100 was down 0.5%, weighed down by declines in the energy and mining sectors, which are heavily weighted in the UK’s main stock index.
Here are 5 actions in motion Tuesday:
(ticker: ANET) the share rose 23% after the company reported earnings of $ 2.96 per share, beating estimates of $ 2.73 per share, on sales of $ 749 million, in the above expectations of $ 738 million.
(UAA) gained 17% after the company reported earnings of 31 cents per share, beating estimates of 15 cents per share, on sales of $ 1.55 billion, above expectations of 1.48 billion dollars.
From the Pont de Nemours
(DD) the stock gained 5.2% after the company said it agreed to buy
(ROG) for $ 5.2 billion. The company also announced that it will divest part of its materials business.
(TSLA) shares fell 1.4% after the company said it had yet to sign a deal to supply 100,000 electric vehicles to Hertz.
The stock (XOM) fell 0.6% after being demoted to Sell from Hold at Truist.
Write to Jacob Sonenshine at [email protected]