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Dow falls ahead of the Fed meeting




The Dow (UNUELT) fell 1000 points, or 3%, at noon.
The S&P 500 (SPX), the broadest target for the US stock market, was about to end the day in the correction range – a fall of 10% from the last peak.

The S&P 500 traded 3.7% lower at noon. Last week, the index recorded its worst week since March 2020.

Every day last week, stocks deteriorated in the last hour of trading, which is a bad sign for the next day, said TD Ameritrade̵[ads1]7;s marketing strategist JJ Kinahan. The negative sentiment continued on Monday.

Lots to digest

Investors also have a lot on their plate this week.

The earnings season has moved on to Big Tech, inclusive Microsoft (MSFT), IBM (IBM), Intel (INTC) and apple (AAPL), which reports results this week.
Then there is the Fed meeting, which concludes with Wednesday’s policy statement and subsequent press conference. From Monday morning, the market’s expectations for this week are that the central bank will keep interest rates close to zero a little longer, according to the CME FedWatch tool. But for the next meeting, which is not until March, the expectations of an interest rate increase of a quarter percentage point are over 80%.

Expectations are just part of the game. The Fed can also conclude that inflation has been too hot at the end of 2021 and raise interest rates more – or earlier.

Treasury yields, which follow interest rate expectations, were outside last week’s peaks on Monday. The 10-year bond yielded 1.72% at noon after climbing above 1.8% for the first time since before the pandemic last week.

While the Fed is trying to bring down inflation by normalizing pandemic policy, the US economy is struggling with the fallout from the Omicron variant. US output growth in the private sector slowed in January as the highly contagious variant put more pressure on the already vulnerable supply chain and existing labor shortages, according to the IHS Markit flash Purchasing Managers’ Index.
To make matters worse, investors are eagerly watching the situation in Ukraine, while fears are growing that the country may be invaded by Russia.
The news that the US and the UK are pulling some staff from the local embassies does not exactly breed confidence that the situation will be resolved quickly and European stock markets are also sharply lower.

Commodity markets are feeling the pressure of rising tensions, and analysts believe oil prices could rise if the situation escalates. On Monday, however, the US oil price fell 3.3%, or almost $ 2.90 per barrel, to $ 82.31 at noon.

CNN Business’ Julia Horowitz contributed to this report.



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