Stock indexes slipped Tuesday morning ahead of comments from Federal Reserve Chairman
Jerome Powell
that investors hope will shed light on the path for U.S. interest rates.
The S&P 500 fell 0.3% while the Nasdaq Composite was down 0.2%. The Dow Jones Industrial Average slipped 0.3%.
Mr. Powell is due to speak at the Economic Club of Washington at 12:40 p.m. ET, in an interview with Carlyle Co-Chairman
David Rubenstein.
Investors will dissect Mr. Powell’s comments for clues on how the Fed chair is thinking about future monetary policy. Investors have grown optimistic that the Fed is approaching the end of its most aggressive series of interest-rate increases since the 1980s.
But Friday’s stronger-than-expected jobs data raised questions about whether the Fed will need to raise rates more, or keep them higher for longer, to temper inflation.
“I think the Fed will have to retain a restrictive stance with rates. The labor market is too strong and that will continue to feed wage and services inflation,” said Dan Boardman-Weston, chief executive at BRI Wealth Management.
That sentiment has threatened to puncture a market rally that in recent weeks drove up riskier assets, from high-yield bonds and the tech-heavy Nasdaq to bitcoin and shares in companies like the used-car seller
Mr. Boardman-Weston said he expects higher borrowing costs and inflation to eat further into companies’ profitability. Companies in the S&P 500 are expected to report that profit margins shrank by 8.7% in the fourth quarter compared with the prior year, according to estimates from
“We are starting to see it already in the earnings pressure on companies, mainly from a margin perspective, and that is likely to lead to continued volatility for markets,” Mr. Boardman-Weston said.
A decline in quarterly earnings reported Tuesday morning by Carrier Global, a maker of heating and air-conditioning equipment, sent the stock down 3.9%. Chemicals giant
on the other hand, gained 6% after posting a better-than-expected adjusted profit.
Further reports this week will bring results from companies including
and
A stock market rally in recent weeks has driven up prices for riskier assets.
Photo:
ANDREW KELLY/REUTERS
Bond yields were little changed as traders waited for Mr. Powell’s remarks. The yield on the benchmark 10-year U.S. Treasury note rose to 3.655% from 3.632% on Monday, according to Tradeweb. The interest-rate-sensitive two-year yield was nearly flat at 4.45%. Yields rise as bond prices fall.
In commodity markets, oil prices rose after devastating earthquakes in Turkey and Syria on Monday closed a key export terminal. Brent crude, the global benchmark, rose 0.8% to $81.67 a barrel.
Turkey’s Borsa Istanbul 100 slid 8.4% as the death toll from the earthquakes continued to rise and rescue teams raced to reach people buried under buildings.
Stocks in Europe were mixed, with the Stoxx Europe 600 close to flat and the U.K.’s FTSE 100 down 0.8%.
shares jumped 7.1% after the oil giant reported a $27.7 billion profit for 2022 and said it would boost its dividend and buy back more shares.
In Asia, Hong Kong’s Hang Seng Index rose 0.4% while Japan’s Nikkei 225 was close to flat.
Write to Chelsey Dulaney at chelsey.dulaney@wsj.com and Matt Grossman at matt.grossman@wsj.com
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