Stocks drift in early going on Wall Street ahead of the Fed

NEW YORK (AP) — Stocks are drifting between small gains and losses in the early going on Wall Street Tuesday as investors await Wednesday’s decision by the Federal Reserve on interest rates. The Fed is expected to raise its benchmark rate by twice the usual amount this week as it steps up its fight against inflation, which is at a four-decade high. The S&P 500 was just barely in the red after the first few minutes of trading Tuesday, as was the Dow Jones Industrial Average. Technology stocks were weaker in the early going after rallying late in the day on Monday. The Nasdaq fell 0.3%.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

NEW YORK (AP) — U.S. markets pointed lower before the opening bell Tuesday ahead of the release of the Federal Reserve’s decision this week on interest rates.

Futures for the Dow Jones industrials and the S&P 500 both declined 0.2% with less than two hours before markets open.

Investors are expecting another rate hike by the U.S. Federal Reserve this week as it and other central banks accelerate efforts to curb four-decade high inflation. The central bank is expected to raise short-term interest rates on Wednesday by double the usual level. It has already raised its key overnight rate once, for the first time since 2018, and Wall Street is expecting several big hikes in coming months.

That will make it more costly to borrow — for a car, a home, a credit card purchase and may cool a red-hot economy. It also would weigh on the high-flying stock markets as investors transfer money into other assets as yields rise. Ultra-low interest rates helped drive stocks to unprecedented highs during the pandemic.

Benchmarks rose in Hong Kong, Paris and Frankfurt but fell in Sydney and London. Trading was light with markets in mainland China, Japan and some other countries closed for holidays.

Australia’s central bank lifted its benchmark interest rate to 0.35% from 0.1%, the first such hike since 2010. The Fed is expected to announce a rate hike Wednesday as it and other central banks battle inflation that has been hovering at 40-year highs.

Australia’s S&P/ASX 200 fell 0.5% to 7,307.50 on Tuesday.

In midday European trading, Germany’s DAX rose 0.2% while the CAC 40 in Paris advanced 0.3%. Britain’s FTSE 100 slipped 0.7%.

In Asia, Hong Kong’s Hang Seng inched 0.1% higher to 21,101.89. The index had rallied earlier in the day on hopes for further easing of coronavirus prevention rules. But it failed to hold onto those gains. The government reported that the territory’s economy contracted by 4% in annual terms in the first quarter of the year.

In South Korea, the Kospi shed 0.3% to 2,680.46. Shares also fell in Taiwan and Thailand.

On Monday, a late-afternoon turnaround led by technology stocks left major indexes moderately higher on Wall Street, averting more losses following a brutal April when widespread tech sell-offs dragged down major benchmarks.

Concerns about rising inflation have been hanging over the latest round of corporate earnings. This week is bringing more, with CVS Health reporting results on Wednesday and Kellogg on Thursday. Pfizer reported strong first quarter sales and profit on Tuesday, but revised its full-year outlook lower, sending shares down 1.3% before the opening bell.

The yield on the 10-year Treasury was at 2.96% after rising to 3.00% on Monday. It hadn’t been above 3% since Dec. 3, 2018, according to Tradeweb.

Higher yields make bonds increasingly attractive assets relative to more risky and expensive stocks, particularly those of technology and other growth-oriented companies.

European energy ministers were meeting in Brussels to discuss Russian supply issues and sanctions. Russia’s invasion of Ukraine has prompted a jump in already high oil and natural gas prices.

U.S. benchmark crude oil lost $1.30 to $103.80 per barrel in electronic trading on the New York Mercantile Exchange. It gained 48 cents to $105.17 per barrel on Monday.

Brent crude shed $1.25 to $106.33 per barrel.

In currency trading, the dollar was at 129.89 Japanese yen, down from 130.15 yen on Monday. The euro rose to $1.0544 from $1.0505.

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