In early trading on Tuesday, US equities were divided as investors began to lose faith that interest rate hikes would come to a halt as the quarterly earnings season continued.
The Dow Jones Industrial Average was down 41 points, or 0.1%, at 9:33 a.m. ET, while the S& P 500 was down 0.1% and the NASDAQ Composite was up 0.2%.
Peak-rate optimism is fading
The major Wall Street indices had their best week of the year last week, and showed slight gains on Monday, on optimism that the Federal Reserve’s massive monetary tightening is coming to an end.
However, this optimism began to fade when Federal Reserve Bank of Minneapolis President Neel Kashkari stated on Monday that the United States central bank will likely need to do more to manage inflation.
“We haven’t solved the inflation problem completely.” “We still have a lot of work to do to get it done,” he added in an interview.
Adding to the gloom, the Reserve Bank of Australia raised interest rates earlier Tuesday, citing slower-than-expected inflation reduction.
A trio of Fed officials will talk later today, ahead of two visits by Chair Jerome Powell in the following days, with investors looking for indications on the central bank’s future actions. The Fed is expected to keep interest rates unchanged at its December meeting, according to futures markets.
Earnings season continues
The quarterly earnings season continues this week, even though more than 80% of S& P 500 corporations have already reported.
Uber Technologies (NYSE: UBER) missed estimates, although gross bookings exceeded expectations. The ride-hailing platform’s stock fell 1.1%.
Furthermore, WeWork (NYSE: WE) has filed for bankruptcy in a New Jersey court, as it deals with a post-pandemic drop in workplace occupancy and pricey rents. The trading of stocks was suspended.
Crude falls as a result of insufficient Chinese trade data
Oil prices fell steeply Tuesday, falling to more than two-month lows, as weak Chinese trade data fanned fears about slow demand in the world’s top oil importer.
Chinese exports decreased more than expected in October due to weakening international demand, while imports unexpectedly increased, causing China’s trade surplus to contract to its lowest level in 17 months.
This protracted weakness in exports may hinder future growth in the country, reducing oil consumption.
Both futures have fallen in price in the last week as investors become increasingly confident that the Israel-Hamas conflict will not impair supply in this oil-rich area.
