US stock markets fell early on Tuesday
After spending most of the night low.
Investors are wary of the central bank, hoping it could slow the pace of interest rate hikes in an effort to curb stubbornly high inflation.
The services sector, which makes up the largest part of the U.S. economy, showed surprising growth in November, the Institute for Supply Management said Monday.
Business orders at US factories and orders for durable goods also rose more than expected in October. That news is positive for the broader economy, but it complicates the central bank’s fight against inflation, as the central bank needs to raise interest rates to ease price pressures.
The Fed meets next week and is expected to raise interest rates by half a percentage point, marking a relaxation of sorts from a steady stream of three-quarter percentage point rate hikes.
The central bank has raised its benchmark rate six times since March, to a 15-year low of 3.75% to 4%. Wall Street expects the benchmark rate to peak between 5% and 5.25% in mid-2023.
The aim is to cool growth without putting the brakes on the global economy, causing a slowdown that slows trade and consumer spending.
The S&P 500 fell 1.8% to 3,998.84 on Monday. The Dow Jones industrial average lost 1.4% to 33,947.10, while the tech-heavy Nasdaq gave back 1.9% to 11,239.94. S
Mall-company stocks fell further, sending the Russell 2000 index down 2.8% to 1,840.22.
Wall Street will receive its weekly update on jobless claims on Thursday, while a November report on producer prices is due on Friday.
Meanwhile, shares in Asia were mostly lower on Tuesday after Wall Street retreated as surprisingly strong economic reports highlighted the difficulty of the Federal Reserve’s fight against inflation.
Tokyo rose, Shanghai was flat and other regional markets fell. US futures rose and oil prices advanced. In Asian trade, Hong Kong’s Hang Seng fell 0.7% to 19,367.84 and South Korea’s Kospi fell 1.1% to 2,393.16. The Shanghai Composite Index was at 3,212.53. Tokyo’s Nikkei 225 index rose 0.2% to end at 27,885.87. Stocks also fell in Bangkok and Taiwan.