Wall Street points down after two days of gains

NEW YORK (AP) — Major U.S. markets fell ahead of the opening bell on Wednesday as broad concerns about interest rates, inflation and the war in Ukraine continue to weigh on investors.

Dow Jones industrials futures fell 0.4% and fell 0.3% on the S&P 500. Most Asian markets ended in positive territory, mimicking U.S. gains on Tuesday, while Shares in Europe were down at midday.

“Stocks are drifting lower as the broader narrative remains unchanged, with peak inflation optimism meeting increasingly bellicose pivots from central banks,” Stephen Innes of SPI Asset Management said in a commentary.

Britain’s FTSE 100 and Germany’s DAX both fell 0.6%, while the CAC 40 in Paris lost 0.7%.

U.S. stocks gained for the second day in a row on Tuesday, even as the World Bank sharply cut its forecast for economic growth this year, pointing to Russia’s war on Ukraine and the possibility of food shortages and the potential return of “stagflation”, a toxic mix of inflation and anemic growth not seen in more than four decades.

Treasury Secretary Janet Yellen, testifying before the Senate Finance Committee on Tuesday, said she expects inflation to remain high and bringing that down is a top priority.

More data on recent price swings arrives Friday when the United States releases its Consumer Price Index, which excludes volatile food and energy prices.

The fragility of the economy has been at the top of Wall Street’s minds this year amid concerns about interest rate hikes coming from the Federal Reserve. The central bank is taking aggressive action to stamp out the worst inflation in decades, but it risks stifling the economy if it goes too far or too quickly.

The Fed is widely expected to raise its main short-term interest rate by half a percentage point at its meeting next week. It would be the second consecutive increase of double the usual amount, and investors are expecting a third in July.

Treasury yields have risen significantly this year on expectations of a more aggressive Fed. They moderated a bit on Tuesday, however.

The 10-year Treasury yield held just above 3% at 3.01% early Wednesday. The two-year yield, which more closely tracks expectations for Fed action, rose slightly to 2.75% from 2.73%.

The next big inflation update comes on Friday, when the US government releases its latest reading on the Consumer Price Index.

In Asian trading, Hong Kong shares jumped 2.2% to 22,014.59 on heavy buying of shares of Chinese tech companies after Beijing approved a new batch of video games. It was seen as a sign that the business outlook for tech companies is improving after a prolonged regulatory crackdown.

Tokyo’s Nikkei 225 gained 1% to 28,234.29 after Japan announced its economy contracted at a slower pace than previously reported in the January-March quarter, declining 0.5% instead of 1%. The latest data showed that consumer spending was not as weak as expected.

In India, the Sensex loses 0.4% to 54,905.16 after the Reserve Bank of India raised its key rate by 0.5 basis point to 4.9%.

South Korea’s Kospi was little changed at 2,626.15. In Sydney, the S&P/ASX 200 rose 0.4% to 7,121.10. The Shanghai Composite index reversed its early losses, gaining 0.7% to 3,263.79.

In other trading, the benchmark U.S. crude oil added $1.12 to $120.53 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the standard for international trade, rose $1.04 to $121.61 a barrel.

The US dollar was trading at 134.03 Japanese yen, down from 132.61 yen. The euro fell from $1.0705 to $1.0736.

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