NEW YORK (AP) — Stocks are opening lower on Wall Street as investors brace for another big interest rate hike this week from the Federal Reserve. Crude oil prices also fell in early trading on Monday. Major US indexes fell about a third of a percent at the start, and Treasury yields rose. Markets are anticipating Wednesday, when the Federal Reserve will announce its latest rate decision. It is expected to raise its policy rate, which influences interest rates across the economy, by another three-quarters of a percentage point in its fight against inflation.
THIS IS A BREAKING NEWS UPDATE. AP’s previous story follows below.
NEW YORK (AP) — Wall Street dipped lower ahead of the opening bell on Monday ahead of another big expected hike in interest rates from the U.S. Federal Reserve.
Dow Jones Industrials futures and S&P 500 futures each fell 0.9%.
Britain was observing a day of mourning for Queen Elizabeth II. Japanese markets were closed for a holiday.
The German DAX lost 0.4% while the CAC 40 in Paris lost 1%.
Markets are on edge with stubbornly high inflation and interest rate hikes being used to combat it. The fear is that the Fed and other central banks will overshoot their policy targets, triggering a recession.
Most economists predict that The Fed will raise its key rate another three-quarters of a point when central bank leaders meet this week.
“The fact is, hawkish expectations based on ‘hot under the hood’ US inflation mean markets have good reason to brace for headwinds in a higher rate outlook (for longer); and arguably ‘higher for longer’ the USD (dollar) as well,” Mizuho Bank‘s Vishnu Varathan said in a commentary.
Hong Kong’s Hang Seng fell 1% to 18,565.97 while the Shanghai Composite Index lost 0.4% to 3,115.60. Australia’s S&P/ASX 200 fell 0.3% to 6,719.90. In Seoul, the Kospi fell 1.1% to 2,355.66.
Japan’s central bank meets on Wednesday and Thursday amid growing pressure to counter a sharp decline in the value of the yen against the dollar. This has increased costs for businesses and consumers, who must pay more for imports of oil, gas and other basic necessities.
However, the Bank of Japan has so far held firm by maintaining an ultra-low benchmark rate of minus 0.1% in hopes of boosting investment and spending.
On Friday, a stern warning from FedEx about rapidly deteriorating economic trends heightened anxiety in markets. The S&P 500 fell 0.7%, while the Nasdaq lost nearly 1%. The Dow lost nearly half a percent.
The S&P 500 fell 4.8% for the week, with much of the loss coming from a 4.3% rout on Tuesday following a surprisingly hot inflation report.
All major indexes have now posted losses in four of the past five weeks.
fedex fell 21.4% for its biggest single-day sale on Friday after warning investors that its fiscal first-quarter profit will likely fall below forecasts due to a drop in business. The package delivery service is also closing storefronts and corporate offices and expects business conditions to weaken further.
Higher interest rates tend to weigh on equities, especially the more expensive tech sector. The housing sector is also suffering from the rise in interest rates. United States medium to long term mortgage rates climbed above 6% last week for the first time since the housing crash of 2008. Rising rates could make an already tight housing market even more expensive for US buyers.
But the rate hikes have yet to significantly cool the economy.
Last week, the United States announced that consumer prices rose 8.3% in August from a year agothe the job market is always hot and consumers continue to spendall of which give arguments to Fed officials who say the economy can tolerate more rate hikes.
In other trading on Monday, benchmark U.S. crude fell $2.01 to $83.10 a barrel in electronic trading on the New York Mercantile Exchange. It edged up 1 cent to $85.11 a barrel on Friday.
Brent crude oil fell $1.93 to $89.42 a barrel.
The dollar strengthened to 143.57 Japanese yen from 142.94 yen. The euro slipped to 99.93 cents against $1.0014.
AP Business Writer Elaine Kurtenbach contributed to this report from Bangkok.
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