Stocks turn lower with Fed policy, jobs data in focus

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

The S&P 500 (^GSPC) fell about 0.23% in afternoon trading, while the Dow Jones Industrial Average (^ DJI) fell nearly 0.2%. The technology-intensive Nasdaq composite (^IXIC) fell 0.5%. All three indexes had risen to start the session.

Investors digested economic releases on Tuesday, including the Job Openings and Turnover Survey (JOLTS), which found job openings unexpectedly rose in September to 10.7 million against 10.28 million last month. Economists had expected openings to decline to around 10 million, which would have been in line with the kind of cooling the Federal Reserve wants to see in the labor market.

Meanwhile, the ISM manufacturing PMI for October fell to 50.2, while economists polled by Bloomberg estimated it at 50.0. The ISM manufacturing employment index fell from 48.7 to 50.0, while economists polled by Bloomberg put the estimate at 53.0.

Stock market moves came after major indexes shifted on monday as investors braced for the Federal Reserve’s interest rate decision this week. Still, stocks ended October on a high note, with the Dow Jones posting its best monthly return since January 1976, when the index gained 14.2%, according to data from Bespoke Investment Group.

The aggressive pace of Fed interest rate hikes pressured markets for much of the year, leaving investors hopeful for any signs that the central bank will come out of its warmongering position.

The Fed is largely should raise interest rates 75 basis points on Wednesday after its two-day policy meeting, but some strategists see the bank slowing the pace of increases going forward.

JPMorgan economist Michael Feroli sees “a drop of 75 basis points to 50 basis points and then to 25 basis points before the end of this tightening cycle. Any indication from the Fed that [the] terminal rate is lower or that the tightening cycle ends in 2022 is likely to [be] digested on the rise by equities. The biggest risk to this view is that the CPI will be warmer than expected next week or in December.”

Regardless of the magnitude of the December decision, “the Fed is in a difficult position because it is very dependent on data. And it’s unclear how quickly inflation will come down,” said Lisa Erickson, head of the public markets group. Yahoo Finance Live In Monday.

On the earnings and business front on Tuesday:

  • Uber (UBER): The carpooling giant has published a loss in the third quarter but beat analyst estimates for revenue and showed an increase in bookings. Shares rose more than 14% in early trading.

  • Pfizer (DFP): The drug maker posted a better than expected quarter and raised its revenue outlook for the year despite higher prices offsetting slower demand for COVID-19 vaccines outside the United States.

  • Sofia (SOFI): The digital bank reported a quarterly loss and revenue below expectations, beating analysts’ 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 (THERE IS): The pharmaceutical company beat the third quarter expectations but cut its outlook for 2022, citing exchange rates and tax laws.

  • Abiomed (AMDD): The manufacturer of small heart pumps accepted a nearly $17 billion taken over by Johnson & Johnson (JNJ) as the deal gives J&J exposure to a high-growth segment of medical technology.

Advanced micro-systems (AMD), Airbnb (ABNB), Mondelez (MDLZ) and Clorox (CLX) are also expected to report on Tuesday.

And the week will end with the October jobs report. The Labor Department report is expected to show the monthly payroll falling below 200,000, while economists polled by Bloomberg estimate that 190,000 jobs were added or created last month.

In energy markets, Brent crude, the international benchmark for oil prices, fell to $94.36 a barrel on Tuesday morning. 10-year Treasury bond yields fell 12 basis points below 4% before rising above this level later in the morning.

US-listed shares of Chinese companies, including Alibaba (BABA) also surged on Tuesday as unconfirmed reports on social media circulated that the Chinese government may be moving towards abandoning its strict COVID policy.

Elsewhere, the Toronto Stock Exchange resumption of trade after a technical glitch halted the market shortly after the opening bell on Tuesday.

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

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