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Stocks fall, yields rise as investors weigh rate hike expectations


U.S. stocks ease, Treasury yields rise as investors weigh higher interest rates By Reuters

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Economy 3 hours ago (Sep 06, 2022 17:59)

© Reuters. FILE PHOTO: People pass by an electronic screen showing Japan’s Nikkei share price index inside a conference hall in Tokyo, Japan June 14, 2022. REUTERS/Issei Kato/File Photo

By Caroline Valetkevitch

NEW YORK (Reuters) -Global stock markets were mostly lower on Tuesday while benchmark U.S. Treasury yields jumped to their highest levels since June as a U.S. services industry report underscored expectations the Federal Reserve will need to keep hiking interest rates.

The U.S. dollar strengthened, while the Japanese yen hit a fresh 24-year low.

Wall Street’s three major indexes were down slightly in choppy trading after the market was closed for Monday’s Labor Day holiday.

A survey from the Institute for Supply Management (ISM) showed the U.S. services industry picked up in August for the second straight month amid stronger order growth and employment, while supply bottlenecks and price pressures eased.

The ISM non-manufacturing PMI edged up to a reading of 56.9 last month, beating economists’ expectations.

“People recognize the U.S. economy is slowing, but it’s still the least ugly in the contest,” said Marc Chandler, chief market strategist at Bannockburn Global Forex.

The European Central Bank is widely expected to lift rates sharply when it meets later this week. The next U.S. Fed rate decision comes on Sept. 21.

The Fed is expected to raise rates by another 75 basis points at its Sept. 20-21 meeting, which would raise the fed funds rate to 3.0% to 3.25%. That is up from the zero to 0.25% band in March.

The Dow Jones Industrial Average fell 95.07 points, or 0.3%, to 31,223.37, the S&P 500 lost 8 points, or 0.20%, to 3,916.26 and the Nasdaq Composite dropped 46.63 points, or 0.4%, to 11,584.24.

The pan-European STOXX 600 index rose 0.24% and MSCI’s gauge of stocks across the globe shed 0.30%.

{{2126|The dodollar index rose 0.5%, while the euro was sliding again having failed to get back above parity against the dollar [/FRX]. The euro was last down 0.17% to $0.9909.

The Japanese yen weakened 1.62% versus the greenback to 142.92 per dollar.

Sterling, which has been one of the world’s weakest major currencies over the last month, rose as Liz Truss’s installation as new UK prime minister fed expectations of a big energy relief package there.

Sterling was last trading at $1.1534, up 0.18% on the day.

In U.S. Treasuries, benchmark 10-year note yields were last 3.34%, the highest since June. They have risen from a four-month low of 2.516% on Aug. 2.

In energy, U.S. crude recently rose 0.56% to $87.36 per barrel and Brent was at $93.47, down 2.37% on the day.

U.S. stocks ease, Treasury yields rise as investors weigh higher interest rates

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