Wall Street Subdued Ahead of Fed Interest Rate Decision

December 14, 2022by Elaine Kurtenbach and Matt Ott, Associated Press
Wall Street Subdued Ahead of Fed Interest Rate Decision
A street sign is seen in front of the New York Stock Exchange in New York, Tuesday, June 14, 2022. AP Photo/Seth Wenig, File)

Early trading on Wall Street is muted ahead of the Federal Reserve’s final decision of the year on interest rates.

Futures for the Dow Jones Industrial Average and the S&P 500 were flat Wednesday, shifting between tiny gains and losses.

7.1% U.S. consumer price index reading for November has raised hopes that pressure on the economy may ease, with the Fed widely expected to raise its benchmark rate a half-point.

A half-point move in either direction would be twice the typical size and a big deal at almost any point in the long history of the Fed, yet it would be a step back from the four consecutive 0.75 percentage point hikes approved since the summer as the Fed fights inflation hovering near four-decade highs

Rate decisions by the Bank of England and European Central are expected Thursday.

Germany’s DAX slipped 0.5%, while the CAC 40 in Paris lost 0.3%. Britain’s FTSE 100 also gave up 0.3%.

The Bank of Japan’s latest quarterly “tankan” survey showed a deterioration in business conditions for major Japanese manufacturers, reflecting higher costs for industrial inputs and energy and weaker demand as the Fed and other central banks raise interest rates to tame inflation.

“Today’s Tankan survey suggests that while the services sector is going from strength to strength, the outlook for the manufacturing sector continues to worsen,” Darren Tay of Capital Economics said in a commentary. He noted that capital spending projections also weakened slightly.

Tokyo’s Nikkei 225 advanced 0.7% to 28,156.21 and the Hang Seng in Hong Kong added 0.4% to 19,673.45. South Korea’s Kospi was up 1.1% at 2,399.25.

The Shanghai Composite index was virtually unchanged, at 3,176.53.

In Australia, the S&P/ASX 200 gained 0.7% to 7,251.30. India’s Sensex gained 0.7% while the SET in Bangkok added 0.4%.

On Tuesday, the S&P 500 rose 0.7% and the Nasdaq composite gained 1%. The Dow Jones Industrial Average picked up 0.3%. The Russell 2000 index rose 0.8%.

Delta Air Lines rose about 4% before the opening bell after it raised its fourth-quarter outlook and issued an optimistic forecast for 2023 . Other major carriers were pulled along, rising between 1% and 3% early Wednesday.

Stocks pared earlier back gains as analysts cautioned investors not to get carried away by hopes for a more dovish move by the Fed, the detail of the inflation data “under the hood being less encouraging than it is on the surface,” Mizuho Bank economists said in a report. They noted that core services prices were up 0.4% from a month earlier, distorting inflation risks.

“To be precise, the headline understates underlying inflation risks that concern the Fed,” the report said.

Tuesday’s report offered hope that inflation peaked during the summer, though prices remain painfully high.

Some of Wall Street’s wildest action Tuesday was in the bond market, where yields fell sharply immediately after the inflation report’s release.

The yield on the 10-year Treasury, which helps set rates for mortgages and other important loans, hovered around 3.51% early Wednesday after falling from 3.62% late Monday. The two-year yield, which more closely tracks expectations for the Fed, dropped to 4.2% from 4.39%.

Even if inflation is abating, the global economy is still at potential risk from rate increases already pushed through. High interest rates are used to slow an overheated economy, but they can also push it into recession. The housing industry and other businesses that rely on low interest rates have shown particular weakness, and worries are rising about the strength of corporate profits broadly.

In other trading, U.S. benchmark crude gained 58 cents to $75.97 per barrel in electronic trading on the New York Mercantile Exchange. It jumped $2.22 on Tuesday to $75.39 per barrel.

Brent crude, the pricing basis for international trading, gained 63 cents to $81.31 per barrel.

The dollar slipped to 135.01 Japanese yen from 135.59 yen. The euro rose to $1.0664 from $1.0633.

——

Kurtenbach reported from Bangkok; Ott reported from Washington.

A+
a-
  • consumer price index
  • interest rate
  • stocks
  • In The News

    Health

    Voting

    Economy

    Inflation Slowed Further in December as Economic 'Soft Landing' Moves Into Sharper Focus

    WASHINGTON (AP) — The Federal Reserve’s preferred inflation gauge cooled further last month even as the economy kept growing briskly, a... Read More

    WASHINGTON (AP) — The Federal Reserve’s preferred inflation gauge cooled further last month even as the economy kept growing briskly, a trend sure to be welcomed at the White House as President Joe Biden seeks re-election in a race that could pivot on his economic stewardship. Friday’s... Read More

    Americans' Economic Outlook Brightens as Inflation Slows and Wages Outpace Prices

    WASHINGTON (AP) — After an extended period of gloom, Americans are starting to feel better about inflation and the economy —... Read More

    WASHINGTON (AP) — After an extended period of gloom, Americans are starting to feel better about inflation and the economy — a trend that could sustain consumer spending, fuel economic growth and potentially affect President Joe Biden's political fortunes. A measure of consumer sentiment by the University of Michigan has... Read More

    Some Americans Will Get Their Student Loans Canceled in February as Biden Accelerates New Plan

    WASHINGTON (AP) — The Biden administration will start canceling student loans for some borrowers in February as part of a new... Read More

    WASHINGTON (AP) — The Biden administration will start canceling student loans for some borrowers in February as part of a new repayment plan that's taking effect nearly six months ahead of schedule. Loan forgiveness was originally set to begin in July under the new SAVE repayment plan, but... Read More

    In Milwaukee, Biden Looks to Highlight Progress for Black-Owned Small Businesses

    WASHINGTON (AP) — President Joe Biden is aiming to use a visit to the battleground state of Wisconsin on Wednesday... Read More

    WASHINGTON (AP) — President Joe Biden is aiming to use a visit to the battleground state of Wisconsin on Wednesday to spotlight a surge in federal government support for Black-owned small businesses during his White House tenure and to highlight his administration's efforts to ramp up... Read More

    Wall Street Rises on Hopes for Rate Cuts, as Dow Ticks Toward Another Record

    NEW YORK (AP) — Wall Street is ticking higher Thursday following its big rally the day before on excitement that... Read More

    NEW YORK (AP) — Wall Street is ticking higher Thursday following its big rally the day before on excitement that several cuts to interest rates may indeed be coming next year. The S&P 500 was 0.3% higher in morning trading and within 1.5% of its all-time... Read More

    Biden to Convene New Supply Chain Council, Announce 30 Steps to Strengthen US Logistics

    WASHINGTON (AP) — President Joe Biden on Monday will convene the first meeting of his supply chain resilience council, using the event... Read More

    WASHINGTON (AP) — President Joe Biden on Monday will convene the first meeting of his supply chain resilience council, using the event to announce 30 actions to improve access to medicine and needed economic data and other programs tied to the production and shipment of goods. “We’re determined... Read More

    News From The Well
    scroll top