NEW YORK — U.S. stocks are drifting higher Wednesday as Wall Street waits to hear what will come out of the Federal Reserve’s latest announcement on interest rates.
The S&P 500 was up 0.4% in morning trading, coming off its third straight losing month largely because of higher yields in the bond market. The Dow Jones Industrial Average was up 97 points, or 0.2%, as of 10:15 a.m. Eastern time, and the Nasdaq composite was 0.4% higher.
The Fed is wrapping up its latest meeting on interest-rate policy in the afternoon, and the overwhelming expectation is for it to hold its main interest rate steady for the second straight time. It’s already yanked the overnight rate above 5.25% from nearly zero early last year to its highest level since 2001. The big question is whether the Fed will give any hints about how long it will keep the rate high before cutting it to provide financial markets more oxygen.
Longer-term Treasury yields have been rising rapidly since the spring and catching up with the Fed’s overnight rate. They’ve rallied as the U.S. economy has remained remarkably resilient and the central bank has warned it may keep its short-term rate high for a long time. Worries about the U.S. government’s big borrowing needs have also pushed up yields, and the U.S. Treasury on Wednesday gave some details about how much it will increase its borrowing.
The yield on the 10-year Treasury dipped to 4.79% from 4.92% late Tuesday. Last month, it topped 5% to reach its highest level since 2007, up from less than 3.50% during the spring.
High yields knock down prices for stocks and other investments while making borrowing more expensive for nearly everyone. That slows the economy and puts pressure on the entire financial system.
The Fed has been saying it plans to keep rates high because it wants to ensure high inflation is on its way back down to its 2% target. Strong reports on the economy recently have raised worries about upward pressure on inflation, even if they’re also keeping a long-predicted recession at bay.
Yields eased following a mixed set of reports on the economy Wednesday.
One from ADP suggested hiring accelerated last month by employers outside the government, though not by as much as economists expected. A more comprehensive jobs report from the U.S. government will arrive on Friday.
A separate report said U.S. employers were advertising slightly more job openings at the end of September than economists expected. The Fed has been hoping for softening there, which could take pressure off inflation without requiring many layoffs across the economy.
A third report, meanwhile, said U.S. manufacturing contracted by more last month than economists had forecast. Manufacturing has been one of the U.S. economy’s hardest-hit areas.
In the background, big U.S. companies continue to report stronger profits for the summer than analysts expected, though that hasn’t been enough in recent weeks to offset worries about higher yields.
DuPont fell 4.7% despite reporting stronger profit for the latest quarter than analysts had forecast. The chemical company gave some financial forecasts for the full year of 2023 that fell short of analysts’ expectations as it sees weakness in China and other challenges.
Estee Lauder also pointed to slower growth in China, among other factors, when it cut some of its financial forecasts for its fiscal year. it also reported weaker revenue for the latest quarter than expected, and its stock tumbled 20.1%.
On the winning side of Wall Street, chipmaker Advanced Micro Devices rose 4.5% after it reported stronger profit and revenue for the latest quarter than forecast. Its revenue forecast for the end of 2023 disappointed some analysts, but it also pointed to growth in 2024 coming from the artificial-intelligence boom.
An AI-fueled bonanza earlier this year helped fuel big gains for some Big Tech stocks, with expectations high that the technology could usher in big profits.
In the oil market, prices continue to swing on uncertainty about whether the latest Israel-Hamas war will affect the production and movement of crude. A barrel of benchmark U.S. oil rose 2.4% to $83.00, while Brent crude gained 1.9% to $86.67.
Oil prices recently had dropped back below where they were before the Oct. 7 attack on Israel by Hamas. The region is not home to major oil production, but the fear is that the conflict could draw in Iran or other big oil-producing nations.
A barrel of U.S. oil had jumped from less than $70 in the summer to more than $93 shortly before the war.
In stock markets abroad, indexes were mostly higher across Europe and Asia.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
