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Stocks end lower as Fed continues to fight inflation – Daily Local

DAMIAN J. TROISE and ALEX VEIGA (AP Business Writers)

Stocks tumbled on Wall Street and US Treasury yields rose again to multi-year highs a day after the Federal Reserve indicated that the fight against inflation was far from over. The S&P 500 fell 1.1% on Thursday. The Nasdaq Composite and the Dow also fell. Technology stocks held the largest weight in the market. Yields on two-year Treasury bonds, which tend to track expectations about the future of the Federal Reserve, rose to their highest levels since 2007. The Bank of England has raised interest rates the most in 30 years.

This is breaking news. Here’s AP’s previous story:

Stocks tumbled on Wall Street and Treasury yields hit another multi-year high on Thursday, a day after the Federal Reserve indicated that the fight against inflation was far from over.

The S&P 500 was down 0.6% as of 2:44pm ET. The benchmark index was broadly divided into gainers and losers. The Dow Jones Industrial Average fell 42 points (0.1%) to 32,106. Tech stocks Nasdaq fell 1.2%.

Yields on 10-year government bonds rose to 4.12% from 4.09% late Wednesday. Bond yields are hovering near multi-year highs as the Federal Reserve (Fed) hikes rates. That has led to more than double his mortgage rates this year and continues to put pressure on the stock market. Two-year Treasury yields, which tend to track market expectations of future Fed action, rose to 4.72% from 4.61%.

The Federal Reserve on Wednesday added another jumbo rate hike, suggesting the pace of rate hikes could slow. Central banks have also shown that interest rates may ultimately need to be even higher than previously thought to contain the worst inflation in decades.

The central bank’s recent three-quarter percentage point hike has pushed short-term interest rates to a range of 3.75% to 4%, the highest level in 15 years. Wall Street is evenly split on whether the central bank will eventually raise interest rates to the 5% to 5.25% range or the 5.25% to 5.50% range.

Rising interest rates not only discourage borrowing and slow the economy, but also make equities less attractive compared to less risky assets such as bonds and CDs.

Stubbornly high inflation is forcing central banks around the world to also raise interest rates. On Thursday, the Bank of England announced its biggest rate hike in 30 years. The Bank of England’s increase was the eighth in a row, the largest since 1992.

European and Asian markets ended mostly lower.

Technology and telecom services stocks held the largest weight in the market. Apple fell his 3.6%, and Warner Bros. Discovery fell his 6.7%.

These losses dampened gains in industrial, energy and other sectors. Boeing was up 6.7% and Marathon Petroleum was up 3%.

Investors had hoped for economic data that suggested the Fed might ease rate hikes. The concern is that the Fed will go too far and slow the economy, triggering a recession.

This week’s better-than-expected data from the jobs sector so far suggests the Fed must remain aggressive. On Friday, Wall Street will receive a broader monthly jobs update from the US government.

Wall Street is also keeping a close eye on the latest corporate earnings reports. Reports are mixed, with many companies warning that inflation is likely to continue to weigh on operations.

Booking Holdings rose 4.3% after reporting a strong third quarter performance. Robinhood Markets rose 10% after the investment app operator reported third-quarter earnings that beat Wall Street estimates. Chip maker Qualcomm fell 6.5% after giving investors weak profit and earnings forecasts.

Joe McDonald and Matt Ott contributed to this report.

https://www.dailylocal.com/2022/11/03/stocks-end-lower-as-the-fed-continues-to-fight-inflation-2/ Stocks end lower as Fed continues to fight inflation – Daily Local

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