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Thursday, December 01, 2022

Stocks that went early on Wall Street fell ahead of the Fed

NEW YORK ( Associated Press) – Wall Street stocks tumbled amid small gains and losses in morning trading on Tuesday as investors await Wednesday’s decision by the Federal Reserve on interest rates.

The S&P 500 was up 0.1% as of 10:18 a.m. The Dow Jones Industrial Average fell 39 points, or 0.1%, to 12,524 and the Nasdaq fell 0.1%.

The benchmark S&P 500 gained more than losers, but the broader market was held back by weakness in technology stocks. Many companies in this sector have valuable stock prices and therefore have more force to push the major indexes up or down.

Energy stocks posted solid gains after encouraging earnings reports from several oil and gas companies. BP jumped 6.9% after reporting its highest quarterly profit in more than a decade due to rising oil and gas prices. Devon Energy rose 5.3% and Diamondback Energy 3.2% after reporting strong financial results.

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Wall Street’s main focus over the next several days is the Fed. The central bank is meeting on Tuesday and will issue a statement on Wednesday. Investors expect it to raise its benchmark rate by more than double the normal amount this week as it intensifies its fight against inflation, which is at a four-decade high. It has already raised its key overnight rate once, the first such increase since 2018, and Wall Street is anticipating several big increases in the coming months.

The Fed’s aggressive move to raise interest rates comes as rising inflation puts more pressure on businesses and consumers. Higher costs for energy and other commodities have prompted many businesses to raise prices and issue cautious forecasts to their investors. Wall Street and economists are concerned that higher prices for everything from food to gas and clothing will slow consumer spending and slow economic growth.

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Bond yields dwindled from 2.99% late Monday; the yield on the 10-year Treasury fell to 2.93%. Treasury yields have generally been rising throughout the year as investors prepare for higher interest rates, which will make borrowing money more expensive.

Investors are closely reviewing the company’s latest round of earnings to learn more about how inflation is affecting business and consumer activity.

Home goods giant Clorox rose 3.5% after reporting solid quarterly profits, but it also cut its profit forecast for the year due to higher costs. Starbucks will report its results later on Tuesday. CVS Health will report its financial results on Wednesday.

Damien J. Trois, The Associated Press

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