The S&P 500 fell 1.13 percent, the Nasdaq Composite down 0.95 percent, and the Dow Jones Industrial Average dropped 1.01 percent.
Tuesday marked the start of the Federal Open Markets Committee’s two-day policy meeting. On Wednesday, central bankers are anticipated to announce a 0.75 percentage point rate hike.
The 2-year Treasury note’s yield jumped as high as 3.99% on Tuesday as the Fed’s two-day policy meeting got underway, the highest level in more than a decade for US government paper yields. The 10-year Treasury yield momentarily reached 3.6%, levels last seen in 2011.
The central bank’s estimates following the meeting are being closely watched by traders in an effort to predict how much further interest rates may climb and what that would entail for the economy. When the Federal Reserve concludes its two-day meeting on Wednesday, what it says it might do in the future will be more important than anything else.
Notably, the S&P 500 rose 2.2%, 3.0%, 1.5%, and 2.6%, respectively, the previous four times the Fed raised interest rates in 2022 in March, May, June, and July.
In business news, Ford shares fell after disclosing that supply chain concerns would cost an additional $1 billion in the third quarter, as we mentioned yesterday in after-hours news. Shares of Ford fell 12.3% overnight, erasing $7 billion from its market worth. This announcement came a few days after FedEx, a leading indicator of global economic expansion, issued a profit warning.
There isn’t a single industry that stands out as supporting the market across all sectors; instead, performance swings from strong one day to weak the next are more common.
The S&P 500’s tech sector has continued to underperform this year, and amid that haze of red is the more limited group of “metaverse equities,” or tech firms creating virtual worlds for gaming, socialising, and employment. The metaverse has been hailed as the largest advancement in consumer technology since the release of the iPhone, according to Goldman Sachs and investor Cathie Wood. By the end of the decade, they estimated, the metaverse would be worth trillions of dollars.
However, both large and small owners are feeling the effects of the collapse in metaverse stocks. The founder of Meta, Mark Zuckerberg, has seen his own wealth decline by $71 billion this year, but it appears that as interest rates rise, investor interest in IT businesses launching ambitious, capital-intensive projects has decreased.
The US Dollar index was up 0.4 per cent, with broad strength on the major crosses.
One Australian dollar weakened compared to the US dollar yesterday, buying 66.95 US cents (Tue: 67.30 US cents), 58.82 Pence Sterling, 96.19 Yen and 67.10 Euro cents.
Iron ore futures are pointing to a 2.1 per cent fall.
Gold lost $7.10 or 0.4 per cent to US$1671 an ounce.
Silver was down $0.17 or 0.9 per cent to US$19.18 an ounce.
Copper lost $0.95 or 0.3 per cent to US$350.30 a pound.
Oil lost $1.28 or 1.5 per cent to US$84.45 a barrel.
The SPI futures are pointing to a 1.1 per cent fall.
Figures around the globe
Across the Atlantic, European markets closed lower. Paris dropped 1.4 per cent, Frankfurt lost over 1 per cent while London’s FTSE closed 0.6 per cent lower.
Asian markets closed higher. Tokyo’s Nikkei added 0.4 per cent, Hong Kong’s Hang Seng gained 1.2 per cent and China’s Shanghai Composite closed 0.2 per cent higher.
Yesterday, the Australian sharemarket gained 1.3 per cent to close at 6806.
Adbri (ASX:ABC) is paying 5 cents fully franked
Apiam Animal Health (ASX:AHX) is paying 0.4 cents fully franked
Atlas Arteria (ASX:ALX) is paying 20 cents unfranked
Capitol Health (ASX:CAJ) is paying 0.5 cents fully franked
Cash Converters (ASX:CCV) is paying 1 cents fully franked
Consolidated Ops Gp (ASX:COG) is paying 4.8 cents fully franked
Cochlear (ASX:COH) is paying 145 cents 40 per cent franked
Countplus (ASX:CUP) is paying 2 cents fully franked
Cleanaway Waste (ASX:CWY) is paying 2.45 cents unfranked
Embelton (ASX:EMB) is paying 20 cents fully franked
Genesis Energy (ASX:GNE) is paying 8.9267 cents unfranked
Kelly Partners Group (ASX:KPG) is paying 1.5 cents fully franked
Lindsay Australia (ASX:LAU) is paying 1.8 cents unfranked
Lycopodium (ASX:LYL) is paying 36 cents fully franked
Macmahon Holdings (ASX:MAH) is paying 0.35 cents unfranked
NRW Holdings (ASX:NWH) is paying 7 cents fully franked
Shine Justice (ASX:SHJ) is paying 3.5 cents unfranked
Australian Finance Group (ASX:AFG)
Aurizon Holdings (ASX:AZJ)
Clinuvel Pharmaceuticals (ASX:CUV)
Deterra Royalties (ASX:DRR)
Hansen Technologies (ASX:HSN)
Ingenia Communities Group (ASX:INA)
Lynch Group Holdings (ASX:LGL)
Lendlease Group (ASX:LLC)
MA Financial Group (ASX:MAF)
Naos Ex-50 Opportunities Company (ASX:NAC)
Naos Small Cap Opportunities Company (ASX:NSC)
Sonic Healthcare (ASX:SHL)
SIV Capital (ASX:SIV)
Suncorp Group (ASX:SUN)
Telstra Corporation Limited. (ASX:TLS)
TPC Consolidated (ASX:TPC)