Stocks fall with Fed policy, jobs data in focus

Stocks lost ground on Tuesday as another batch of earnings rolled in and investors awaited the Federal Reserve’s policy meeting and jobs data later this week.

The S&P 500 (^GSPC) was down about 0.23% in afternoon trade, while the Dow Jones Industrial Average (^DJI) ticked down nearly 0.2%. The technology-heavy Nasdaq Composite (^IXIC) fell by 0.5%. All three indices had risen to start the session.

Investors digested economic releases on Tuesday, including the Job Openings and Labor Turnover Survey (JOLTS), which found job openings unexpectedly rose in September to 10.7 million from 1[ads1]0.28 million the previous month. Economists had expected openings to drop to about 10 million, which would be in line with the kind of cooling the Federal Reserve wants to see in the labor market.

Meanwhile, the October ISM manufacturing PMI index fell to 50.2, while economists polled by Bloomberg had estimated 50.0. The ISM manufacturing employment index rose to 50.0 from 48.7, as economists polled by Bloomberg had estimated 53.0.

The stock moves came after the major indexes slipped on Monday as investors braced for the Federal Reserve’s interest rate decision this week. Still, stocks ended October on a high note, as the Dow locked in its best monthly return since January 1976, when the index rose 14.2%, Bespoke Investment Group data showed.

The Fed’s aggressive pace of rate hikes has pressured markets for much of the year, leaving investors hoping for signs that the central bank will deviate from its hawkish stance.

The Fed is widely expected to raise interest rates by 75 basis points on Wednesday at the conclusion of its two-day policy meeting, but some strategists see the bank slowing the rate of increases going forward.

JPMorgan economist Michael Feroli sees “a step down from 75bps to 50bps and then to 25bps before this tightening cycle ends. Any indication from the Fed that [the] the terminal interest rate is lower or that the tightening cycle ends in 2022 is likely to [be] digested bullishly by stocks. The biggest risk to this view is that the CPI comes in warmer than expected next week or in December.”

Regardless of the size of December’s move, “the Fed is in a tough position because they’re very data-dependent. And it’s just unclear how quickly inflation is going to fall,” Public Markets Group head Lisa Erickson told Yahoo Finance Live on Monday.

On the earnings and company front on Tuesday:

  • Uber (UBER): The ride-hailing giant posted a loss in the third quarter, but beat analysts’ estimates for revenue and showed an increase in bookings. Shares rose more than 14% in early trading.

  • Pfizer (PFE): The drugmaker had a better-than-expected quarter and raised its earnings outlook for the year despite higher prices, offsetting slowing demand for its COVID-19 vaccine outside the United States.

  • SoFi (SOPHIE): The digital bank reported a smaller-than-expected quarterly loss and revenue that topped analyst estimates. The fintech company raised its guidance as the company added 4.7 million more customers at the end of the third quarter.

  • Eli Lilly and Company (LLY): The pharmaceutical company beat expectations for the third quarter but cut its outlook for 2022, citing exchange rates and tax legislation.

  • Abiomed (ABMD): The maker of small heart pumps agreed to a nearly $17 billion takeover by Johnson & Johnson ( JNJ ) as the deal gives J&J exposure to a high-growth segment of medical technology.

Advanced Micro Devices ( AMD ), Airbnb ( ABNB ), Mondelez ( MDLZ ) and Clorox ( CLX ) are also due to report Tuesday.

And the week ends with the jobs report for October. The Labor Department’s report is expected to show monthly payrolls falling below 200,000, while economists surveyed by Bloomberg estimated 190,000 jobs were added or created last month.

In the energy markets, Brent oil, the international benchmark for oil prices, fell to $94.36 a barrel on Tuesday morning. Yields on the 10-year Treasury fell as much as 12 basis points to below 4% before climbing back above that level later in the morning.

U.S.-listed shares of Chinese companies including Alibaba ( BABA ) also rose on Tuesday as unconfirmed social media reports swirled that the Chinese government may be moving toward shedding its strict COVID policies.

Elsewhere, the Toronto Stock Exchange resumed trading after a technical problem halted the market shortly after opening on Tuesday.

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv

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