News: Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
All NewsEconomyCurrencies & ForexEconomic EventsCryptocurrenciesCybersecurityPress Releases

Wall Street ends lower, oil gains as investors await Fed

01/25/2022 | 04:45pm EDT
Traders work on the floor of the NYSE in New York

WASHINGTON (Reuters) - Wall Street ended the day lower on Tuesday after another tumultuous day of trading while oil jumped more than 2% as geopolitical tensions and Wednesday's Federal Reserve update occupied investor focus.

All three major U.S. stock indices experienced a repeat of Monday's bumpy trading. They were unable to completely shake off steep losses earlier in the day and erased Monday's modest gains with new losses.

The Dow Jones Industrial Average fell 0.19%, the S&P 500 lost 1.22% to 4,356.45 and the Nasdaq Composite dropped 2.28%.

Tuesday's decline came after three straight weeks of losses as the S&P flirted with correction territory. If the bellwether index closed 10% or more below its record high reached on Jan 3, it would have confirmed it entered a correction on that date. It ended the session 9.2% below that level.

World stocks are on course for their biggest monthly drop since the COVID-19 pandemic hit markets in March 2020. The MSCI world equity index, which tracks shares in 45 nations, was down 0.99%.

Investors are awaiting Wednesday afternoon, when the Fed will update its policy plan, likely fleshing out timing on expected rate hikes and dwindling of its massive balance sheet. At the same time, growing tensions as Russian troops amassed on Ukraine's border added to a risk-averse environment for investors.

Safe havens including the dollar and gold both posted gains as investors shied away from risk.

Concerns about potential conflict in eastern Europe also drove oil prices higher, as concerns supplies could become tight drove the commodity up over 2%. Brent futures rose $1.93, or 2.2%, to settle at $88.20 a barrel, while U.S. West Texas Intermediate (WTI) crude rose $2.29, or 2.8%, to settle at $85.60.

"Geopolitical risks sent crude prices higher as a tight oil market that is already battling low inventories seems vulnerable to shortages in the coming months," said Edward Moya, senior market analyst at OANDA.

"Energy traders don't know how the situation over the Ukraine-Russia border will unfold or if Iran will be able to reach a nuclear deal, but the odds are something won't go right and that will likely lead to some supply shortages for the oil market," Moya added.

On Wednesday, the Federal Reserve is expected to give guidance about the trajectory of monetary policy tightening, with investors expecting, if the economy stays on its current track, the first post-pandemic U.S. rate hike in March and the Fed to begin shrinking its balance sheet later in the year.

"At this time, it seems likely that runoff will begin no later than June," said Scott Ruesterholz, a portfolio manager at Insight Investment. "While Omicron (coronavirus variant) is likely to weigh on January data, expectations are that its impact will be short-lived, and with inflation so elevated and the jobs market quite healthy, there appears to be a very high hurdle for the Fed not to raise rates."

In the bond market, investors largely held tight with a Fed decision a day away. The U.S. 10-year yield rose about five basis points to 1.7814%..

The U.S. dollar reached a two-week high earlier Wednesday against other currencies as investors flocked to the safe haven. The dollar index, which tracks the greenback versus a basket of six currencies, rose 0.06%.

Spot gold prices rose 0.25% to $1,847.61 an ounce.

(Reporting by Pete Schroeder in Washington; Editing by David Evans, Susan Fenton, Will Dunham, Nick Macfie and Barbara Lewis)

By Pete Schroeder

© Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
DJ INDUSTRIAL 0.60% 32120.28 Real-time Quote.-12.14%
EVOLUTION AB -5.03% 929 Delayed Quote.-23.95%
S&P 500 0.95% 3978.73 Real-time Quote.-17.30%
US DOLLAR / RUSSIAN ROUBLE (USD/RUB) 6.78% 60.2 Delayed Quote.-21.84%
Latest news "Economy & Forex"
05:56pBlackRock, other major McDonald's shareholders side with company in fight with Icahn
05:48pUKRAINE AND RUSSIA : What you need to know right now
05:48pAfter Texas massacre, U.S. senators discuss options against 'very slim' odds
05:46pRussia pounds Ukraine's east as town buries dead in mass grave
05:45pTech Up on Risk Appetite, but Nvidia Falls After Hours -- Tech Roundup
05:44p'NO IDEA THIS WAS GOODBYE' : Texas families grieve on social media
05:43pDepp refutes Heard's claims as 'ludicrous, painful'
05:39pThe WSJ Dollar Index Rises 0.26% to 94.76 -- Data Talk
05:39pSterling Gains 0.34% to $1.2576 -- Data Talk
05:39pEuro Lost 0.51% to $1.0681 -- Data Talk
Latest news "Economy & Forex"