US stocks close higher ahead of Fed meeting

US stock indexes closed slightly higher on Tuesday as investors braced for Federal Reserve policy decision This week and evaluation of a group of earnings.

Stocks moved between small gains and losses during the session, finally rising for the second day in a row after a brutal sell-off that culminated in April. The S&P 500 rose 20.10, or 0.5%, to end at 4,175.48. The Nasdaq Technology Composite Index added 27.74, or 0.2%, to 12563.76. The Dow Jones Industrial Average rose 67.29, or 0.2%, to close at 33,128.79.

The trading reflected a jittery mood among investors who expect the US central bank to accelerate monetary policy tightening this week, the latest step in anti-inflation efforts that have been launched. Raising borrowing costs across the economy this year, Stock and bond markets streaming.

Recent economic data has shown rising costs on everything from groceries to gasoline, with war in ukraine And Severe measures to combat COVID-19 In China the increasing complexity of world trade. US companies also face rising wages Labor markets are still tight. These factors have put inflation at the top of the Fed’s agenda.

With interest rates already higher in expectations this week, stock investors had few broad moves to make as they wait for the conclusion of Wednesday’s Federal Reserve meeting, said Ron Temple, co-head of US equities at Lazard Asset Management.

“People are pretty much centered already, because the Fed has telegraphed a good ‘how it plans to raise rates,’” Temple said.

Individual stock traders have responded to a slew of recent financial reports and forecasts for major companies. investment company

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KKR

It rose $1.35, or 2.6%, to $54.29 after its distributable profit after tax came in higher than analysts’ estimates. Estee Lauder It lost $15.11, or 5.8%, to $245.52 after the company cut its revenue and earnings forecasts.

Rockwell Automation He said quarterly earnings slumped, sending shares down $36.30, or 14.5%, to close at $213.74. education company

jiggle

Its shares have seen a 30% drop. A day after the company’s CEO announced that inflation is turning some higher education students out of school.

In other corporate titles, activist hedge fund Elliott Investment Management Disclosure of approximately 6% stake in Western Digitalsending the data storage company’s shares up about 15%.

Health care real estate trust

Shares rose 7.5% after the Wall Street Journal reported that Welltower remained an interested viewer After a previous takeover bid, though, Healthcare Realty agreed to merge with

American Healthcare Trust.

Overall positive corporate reports have failed to stabilize the market in recent weeks. Earnings growth is in line with historical norms at around 11% annually, according to Deutsche Bank analysts, while margins have remained near record levels despite higher input prices. However, the S&P has lost about 12% year-to-date.

“It’s been a good earnings season,” said Jonathan Golub, chief US equity strategist at Credit Suisse, but investors’ concerns about inflation and the Fed’s response left them gloomy.

“The market is seeing that the Fed is going to have to do a lot to get this under control,” Golub said.

Earning season continues, with

AirbnbAnd

StarbucksAnd

Lift

And

American International Group

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In the block after the markets close.

All eyes are on the Fed’s next steps.


picture:

Brendan McDermid/Reuters

Higher Treasury yields, which as they rise, offer investors lower-risk returns that are more competitive than equities, are weighing on the markets. Return on 10 years Treasuries remained near multi-year highs on Tuesday, tumbling back to 2.957% from 2.995% on Monday. Yields, which move inversely to bond prices and are a reference to borrowing costs across the economy, have risen to their highest since 2018 in anticipation of higher interest rates.

Price-setting officials met on Tuesday for a two-day political meeting. Concluding on Wednesday, the Fed is expected to raise interest rates by half a percentage point, the first such increase in 22 years and after A quarter point increase in March.

Investors will seek details from Chairman Jerome Powell on the central bank’s plans to reduce its bond holdings. Officials recently indicated that they would allow $95 billion in securities to mature each month, Decode another form of stimulation flooded the markets during the pandemic.

Gregory Berdon, chief investment officer at

Arbuthnot Latham.

Mr. Burdon added that financial conditions had already tightened significantly, noting a stronger dollar, higher Treasury yields and higher mortgage rates.

In commodities, Brent crude futures fell $2.61, or 2.4%, to $104.97 a barrel. Traders are waiting for a meeting of ministers of OPEC members and their allies, including Russia, on Thursday, and are watching the shutdown in China, which curbs demand for fuel.

European Union Proposal to ban Russian crude oil By the end of the year it is due to be distributed to member states on Tuesday.

Greg Harmon, founder of Dragonfly Capital Management, said that oil prices remaining above $100 a barrel could weigh on the stock market by raising investor concerns about rising input costs and inflation in general.

“This is going to be a drag on the potential for a turnaround,” said Mr. Harmon.

The Stoxx Europe 600 Index rose 0.5%, led by shares of banks and oil and gas companies on a busy day in the region.

BP shares rose 5.8%. After the oil producer reported base earnings of $6.2 billion, upon scrapping a pre-tax accounting fee related to his decision to exit his Russian holdings.

BNP Paribas

It posted a jump in earnings, sending shares of the French lender up 5.2%.

Mainland China markets are closed for a public holiday. Hong Kong’s Hang Seng added 0.1%.

Federal Reserve Chairman Jerome Powell indicated that the central bank is likely to raise interest rates by half a percentage point at its meeting. Photo: Samuel Corum / Getty Images

Write to Joe Wallace at [email protected]sj.com and Matt Grossman at [email protected]

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