New York: The three main Wall Street stock indexes rallied on Tuesday, a day before an expected interest rate hike by the U.S. Federal Reserve, while oil prices dropped 7% on hopes of an end to the conflict in Ukraine.
Investors are expecting the U.S. central bank to raise interest rates for the first time in three years by at least 25 basis points amid surging prices. Traders will also be closely watching the Fed for details on how it plans to end its bond-buying program.
Ahead of the Fed's meeting on Wednesday, the benchmark 10-year note yields US10YT=RR eased from more than two-year highs and were last at 2.1544%, after earlier rising to 2.169%, the highest since June 2019. Read full story
"I think the big event this week is going to be Fed discussing what they're going to do with the portfolio and how fast they're going to move. The expectation in the short term of course is going to be the raising of the rates by a quarter of a percent," said Tom Plumb, portfolio manager at Plumb Balanced Fund in Wisconsin.
On Wall Street, the benchmark S&P 500, which had slumped about 2.4% in the prior three sessions, rallied, driven by technology, consumer discretionary and healthcare sectors. Read full story
The Dow Jones Industrial Average .DJI rose 1.82% to 33,544.34, the S&P 500 .SPX gained 2.14% to 4,262.45 and the Nasdaq Composite .IXIC added 2.92% to 12,948.62.
"What you're seeing is relief rallies on a bear market. There's hopes and expectations that something will start resolving in Ukraine," Plumb added.
European stocks, which had been rebounding in recent sessions, dipped after China reported a jump in coronavirus cases and new restrictions. The ongoing war in Ukraine also weighed on European shares despite continuing ceasefire talks and some positive signs of a breakthrough. Read full story
The pan-European STOXX 600 index .STOXX lost 0.28% and MSCI's gauge of stocks across the globe .MIWD00000PUS gained 0.94%. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS had closed 2.73% lower overnight.
Oil prices tumbled more than 6% to their lowest in almost three weeks on Tuesday as supply disruption fears eased on Ukraine peace hopes and surging COVID-19 cases in China spurred demand concerns. Read full story
Brent LCOc1 futures plummeted 6.5% to settle at $99.91 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 fell 6.4% to settle at $96.44 a barrel. Both contracts settled below $100 per barrel for the first time since late February.
The U.S. dollar lost value to the euro and other major currencies after oil prices fell and ahead of the Fed's expected rate hike. The dollar index =USD fell 0.043%, with the euro EUR= up 0.04% to $1.0943. Read full story
Safe-haven gold fell nearly more than 1% to a two-week trough. Read full story Spot gold XAU= dropped 1.8% to $1,915.48 an ounce, while U.S. gold futures GCc1 fell 1.55% to $1,929.30 an ounce.- Reuters
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