Stocks turn lower with Fed policy, earnings in focus

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Stocks lost ground Tuesday morning, with another round of gains on tap and investors awaiting the Federal Reserve’s policy meeting and jobs data later this week.

The S&P 500 (^GSPC) fell about 0.2%, while the Dow Jones Industrial Average (^DJI) ticked 0.3% lower. The tech-heavy Nasdaq Composite (^IXIC) fell 0.1%. All three indices rose to kick off the session.

Investors digested economic releases Tuesday, including job data showing job openings unexpectedly surged in September from 10.28 million last month to 10.7 million. Economists had expected openings to narrow to about 10 million, which would have been in line with the kind of cooling the Federal Reserve wants to see in the labor market.

Meanwhile, the ISM manufacturing PMI index fell to 50.2 in October, as economists surveyed by Bloomberg estimate 50.0. The ISM manufacturing employment index rose from 48.7 to 50.0, as economists surveyed by Bloomberg estimated at 53.0.

The stock moves came after major indices lagged Monday as investors prepared for the Federal Reserve’s rate decision this week. Still, the Dow had its best monthly return since January 1976, when the index gained 14.2%, data from Bespoke Investment Group shows.

The aggressive pace of Fed rate hikes has pressured markets for much of the year, leading investors to hope for some sign that the central bank will move away from its aggressive stance.

The Fed is widely expected to raise interest rates by 75 basis points at the end of its two-day policy meeting on Wednesday, but some strategists see the bank slowing its rate of gains going forward.

JPMorgan economist Michael Feroli sees “a step back from 75 basis points to 50 basis points and then 25 basis points before this tightening cycle ends. Any indication from the Fed that [the] end rate is lower or that the tightening cycle is likely to end in 2022 [be] bullish digested by stocks. The biggest risk to this view is that the CPI will be hotter than expected next week or in December.”

Traders work the floor of the New York Stock Exchange NYSE in New York, United States, June 16, 2022. U.S. stocks fell sharply on Thursday as the steep sell-off on Wall Street continued amid mounting fears of a recession. (Photo by Michael Nagle/Xinhua via Getty Images)

As big as December’s move is, “the Fed is in a difficult position because it is very data dependent. And it’s just unclear how quickly inflation will fall,” Lisa Erickson, head of the Public Markets Group, told Yahoo Finance Live on Monday.

Also on the earnings front Tuesday:

  • Uber (UBER): The ride-hailing giant posted a loss in the third quarter, but beat analysts’ estimates for revenue and showed an increase in bookings. Shares were up more than 14% in early trading.

  • Pfizer (PFE): The drugmaker posted a better-than-expected quarter and raised its revenue outlook for the year, despite higher prices that offset slowing demand for COVID-19 vaccines outside the US.

  • SoFi (SOPHIA): The digital bank reported smaller-than-expected quarterly loss and revenue that exceeded analyst estimates. The fintech firm raised its expectations as the company added 4.7 million more customers by the end of the third quarter.

  • Eli Lilly and Company (LLY): The pharmaceutical company beat expectations for the third quarter, but lowered its guidance for 2022, citing exchange rates and tax laws.

  • abiomed (ABMD): The maker of small heart pumps has agreed to a nearly $17 billion acquisition by Johnson & Johnson (JNJ), as the deal gives J&J exposure to a burgeoning segment of medical technology.

Advanced Micro Devices (AMD), Airbnb (ABNB), Mondelez (MDLZ) and Clorox (CLX) will also report on Tuesday.

And the week ends with the October jobs report. The Labor Department report is expected to show monthly payrolls falling below 200,000, while economists polled by Bloomberg estimate that 190,000 jobs were added or created last month.

In energy markets, Brent oil, the international benchmark for oil prices, fell to $94.36 a barrel Tuesday morning. Yields on the 10-year Treasury notes fell a whopping 12 basis points to below 4% before climbing back above that level later in the morning.

US-listed shares of Chinese companies, including Alibaba (BABA), soared Tuesday as unconfirmed social media reports floated that the Chinese government could move toward phasing out its strict COVID policy.

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv

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The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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