[ad_1]
One of the main reasons the US stock market has been rising since late October is the expectation that the Federal Reserve will cut interest rates several times this year. The central bank itself has hinted at this, and easing interest rates would ease pressure on both the economy and the financial system.
But Fed officials also said they need more confirmation that inflation is trending sustainably lower to their 2 percent target before acting. A surprisingly strong report on US manufacturing on Monday, which showed a return to growth after 16 straight months of contraction, hurt those expectations.
It's the latest evidence that the US economy is remarkably resilient. This would keep people employed and increase corporate profits, but it could also add upward pressure on inflation. Progress there has become more difficult recently, as inflation reports this year have been hotter than expected.
The biggest risk is cutting interest rates too early, not too late, Cleveland Fed President Loretta Mester said Tuesday. The former may allow the economy to overheat and return inflation, while the latter may cause unnecessary pain for workers.
Her comments came as economic reports showed that US employers were reporting roughly the same number of job openings in February as they had the previous month, as well as a stronger-than-expected increase in factory orders.
In the bond market, the yield on 10-year Treasury bonds rose to 4.35 percent from 4.33 percent late Monday.
The two-year yield, which moves closely with expectations for Fed action, fell to 4.69 percent from 4.71 percent late Monday.
download
High interest rates slow the economy by design, by making borrowing more expensive. They also hurt investment prices by making it more attractive for investors to instead put money into safer alternatives. Bitcoin fell by 5.4 percent.
Among the few winners on Wall Street were stocks of oil and gas production companies. Exxon Mobil rose 2 percent and Marathon Petroleum rose 3.4 percent.
They followed the price of crude oil higher. The price of a barrel of benchmark US oil rose US$1.44 to settle at US$85.15 and returned to where it was in October. The price of a barrel of Brent crude, the international standard, rose US$1.50 to US$88.92.
In Europe, stocks fell 0.9 percent in Paris. Germany's DAX index lost 1.1 percent, and London's FTSE 100 index fell 0.2 percent.
In Asia, indicators were mixed. Hong Kong's Hang Seng jumped 2.4 percent, but moves were more modest elsewhere.
With AP
The Market Recap newsletter is a summary of the day's trading. Get it all of usHThis afternoon.
[ad_2]
Source