US stocks slide as Wall Street predicts higher interest rates – Orange County Register

By DAMIAN J. TROISE and ALEX VEIGA

Shares pared losses early and rose in afternoon trading on Wall Street on Tuesday as tech stocks reversed course and edged higher.

The S&P 500 was up 0.7% at 1:47 p.m. ET. The benchmark index is escaping five consecutive losses and has not had a winning day since the first trading day of the year, when it established an all-time high.

The Dow Jones Industrial Average rose 116 points, or 0.3%, to 36,185, and the tech-heavy Nasdaq added 0.6 percent.

Traders are trying to adjust to how the market and the economy will handle the likely higher interest rates from the Federal Reserve this year. That has weighed on expensive tech stocks, which become less attractive to investors as interest rates rise.

Tech stocks have been volatile since late Monday, when a late-afternoon rally for the sector trimmed much of the market’s losses. Apple was up 1.2% and chipmaker Nvidia was up 0.7%.

Retailers and other companies that rely on direct consumer spending also rallied. Las Vegas Sands was up 7.6% and Gap was up 3.3%.

Future energy increases. U.S. crude oil prices rose 3.8%, helping to boost energy stockpiles. Exxon Mobil rose 3.8%.

Bond yields have been mostly stable, although they have risen sharply since the start of the year. Yields on 10-year Treasuries fell to 1.75% from 1.77% late Monday.

Utilities and other investments deemed less risky fell.

The Fed said it would accelerate a reduction in bond purchases, which have helped keep interest rates low. Markets now place the probability of the Fed raising short-term rates by at least a quarter in March at around 78%. A month ago, it was about 36%.

The central bank is easing support for the US economy and financial markets as businesses and consumers face persistently rising inflation.

Fed Chairman Jerome Powell on Tuesday acknowledged that high inflation has emerged as a serious threat to the Fed’s goal of helping to get more Americans back to work and that the Fed will raise interest rates more than planned. current if needed to prevent the price from rising. Powell was speaking at a Senate Banking Committee hearing, which is considering his nomination for a second four-year term.

The World Bank downgraded its forecast for the global economy, partly because supply chain problems have fueled inflation. The 189-nation anti-poverty agency forecasts worldwide economic growth of 4.1 percent this year, down from the 4.3 percent increase it forecast last June. It also fell short of the 5.5% expansion it estimates for the global economy in 2021.

Investors will receive two key inflation reports this week from the Labor Department. The consumer price index for December will be released on Wednesday and an update on how inflation is impacting commodity prices for consumers. An index based on US wholesale prices for December will be released on Thursday and provide another update on how inflation is affecting costs for businesses.

Wall Street is also tracking the rising number of coronavirus infections globally to gauge the economic impact. China, the world’s second-largest economy, has placed a third city on lockdown because of the latest surge.

Big companies, including automakers like Toyota, have been counting on a rebound in supplies of semiconductors and other products from China and the rest of Asia, as injection efforts strains and other coronavirus prevention has improved. The recent surge in infections caused by the omicron variant of the coronavirus has shaken such hopes.