Stock market today: Wall Street points higher on hints that interest rate hikes may abate

BANGKOK –

Wall Street is following global markets higher before Tuesday’s opening bell on some potentially encouraging news about interest rates, which have been dragging markets lower since the summer.

Futures for the S&P 500 and the Dow Jones Industrial Average edged 0.1% higher.

On Monday, the S&P 500 flipped from losses to gains after two Federal Reserve officials suggested interest rates might be held steady at the next policy meeting. That’s because a jump in longer-term bond yields may be helping to cool inflation without further market-rattling hikes by the U.S. Fed.

The International Monetary Fund warned Tuesday that the world economy is losing momentum in the face of higher interest rates, the war in Ukraine and widening geopolitical rifts.

Global economic growth is forecast to slow to 2.9% in 2024 from an expected 3% this year, the IMF said. The forecast for next year is down a notch from the 3% it predicted back in July.

PepsiCo rose 1.1% in premarket trading after the beverage and snack maker beat Wall Street’s profit forecasts as it raised prices by double-digits for the seventh quarter in a row.

Defence contractors rose more modestly Tuesday following big gains Monday on speculation of a drawn out military conflict in the Middle East. Shares in Northrop Grumman, General Dynamics and Lockheed Martin are all up between 8% and 12% since Israel declared war against Hamas over the weekend.

In Europe at midday, Germany’s DAX jumped 1.5%, the CAC 40 in Paris was up 1.6% and Britain’s FTSE 100 climbed 1.5%.

Tokyo’s Nikkei 225 finished 2.4% higher Tuesday at 31,746.53 and the Hang Seng in Hong Kong picked up 0.8% to 17,644.73. India’s Sensex advanced 0.9%.

In Australia, the S&P/ASX 200 rose 1% to 7,040.60. South Korea’s Kospi slipped 0.3% to 2,402.58. In Bangkok the SET gained 0.2%.

In the latest sign of trouble in China’s property sector, indebted developer Country Garden said Tuesday that it could not meet all of its obligations and expected its financial situation to remain pressured due to a protracted slump in sales.

Country Garden’s shares tumbled 10.7% in Hong Kong.

Oil prices fell back slightly after surging Monday following Israel’s declaration of war on Hamas following its surprise attack from the Gaza Strip.

The area embroiled in conflict is not home to major oil production, but fears that the fighting could impact the crude market sent a barrel of U.S. oil up US$3.59 on Monday to US$86.38.

Early Tuesday, U.S. benchmark crude was down 49 cents at US$85.89 per barrel in electronic trading on the New York Mercantile Exchange.

Brent crude, the international standard, lost 50 cents to US$87.65 per barrel.

Oil prices already were volatile. A barrel of U.S. crude had jumped from less than US$70 during the summer to more than US$90 last week, raising the pressure on inflation and the overall economy. It pulled back sharply last week before jumping again after the fighting began in Israel.

Interest rates, and expectations for where they will go, have been driving Wall Street’s swings more than anything since the start of last year.

Investors dislike higher interest rates because they knock down prices for stocks and other investments. They also make it more expensive for all kinds of companies and households to borrow money, which slows business activity.

The 10-year yield fell to 4.71% after rising to 4.80%. It was 3.50% during the summer and from just 0.50% early in the pandemic. Trading in the U.S. Treasury market was closed Monday for a holiday.

Reports this week on inflation at both the consumer and wholesale levels are the next big data points due before the Fed makes its next announcement on interest rates on Nov. 1.

This upcoming week will also bring the unofficial start to earnings reporting season for the S&P 500, with Delta Air Lines, JPMorgan Chase and UnitedHealth Group among the big companies scheduled on the calendar.

The dollar rose to 148.70 Japanese yen from 148.51 yen late Monday. The euro was trading at US$1.0576, up from US$1.0568.

Apart from the U.S. dollar, another investment that usually does well in times of stress also rose. Gold was up US$4.80 to US$1,869.10 per ounce. On Monday, it added US$19.10 to US$1,864.30 per ounce.

On Monday, the S&P and Dow each gained 0.6% and the Nasdaq composite climbed 0.4%.