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  • World shares mostly lower after tech-led fall on Wall Street

    World shares mostly lower after tech-led fall on Wall Street

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    BANGKOK — Shares were mostly lower in Europe and Asia on Wednesday as markets were counting down to the end of a painful year for investors, with no end in sight to uncertainties stemming from the pandemic and the war in Ukraine.

    Shares fell in Frankfurt, Paris, Tokyo, Shanghai and Seoul but rose in London and Hong Kong as the Chinese government took further steps to reopen to foreign travel after relaxing its stringent “zero-COVID” policies.

    Oil prices fell back and U.S. futures inched higher.

    Not all world markets have ended the year on low notes. Britain’s FTSE 100 is at about the level it started 2022. Early Wednesday it was up 0.7% at 7,525.42.

    But most other markets have suffered as interest rate increases, waves of coronavirus infections, the war, supply chain disruptions and surging inflation took a toll on businesses and investments.

    Germany’s DAX lost 0.3% to 13,952.83. It’s down about 13% from the start of the year. The CAC 40 in Paris, which is about 9% below where it began the year, edged 0.1% lower, to 6,541.50.

    The future for the S&P 500 was barely changed, down 1 point. The future for the Dow Jones Industrial Average edged 0.1% higher.

    On Tuesday, the S&P 500 fell 0.4% and the Dow industrials eked out a 0.1% gain. The Nasdaq dropped 1.4%, while the Russell 2000 index dropped 0.7%.

    The benchmark S&P 500 index set an all-time high at the beginning of January, but is now down nearly 20% for the year. The tech-heavy Nasdaq is down nearly 34%.

    The Chinese government announced late Tuesday that it will start issuing new passports, a major step away from anti-virus travel barriers that likely will bring a flood of tourists out of China for next month’s Lunar New Year holiday.

    The return of free-spending Chinese visitors to Asia, Europe and other destinations during what usually is the country’s busiest travel season will be a welcome relief for countries like Thailand that depend heavily on tourism.

    But some governments have said they will impose extra precautions on people arriving from China given the widespread virus outbreaks there. U.S. officials, speaking on condition of anonymity to convey internal discussions, also expressed concern and said they were considering taking similar steps.

    With China in the midst of its most severe COVID wave so far, disruptions to manufacturing and transport will likely linger until the worst is past.

    “Investors are enthusiastic about China re-opening its economy. However, there are plenty of reports which suggest that COVID cases are on the rise in China, which really threatens the supply chain,” Naeem Aslam of Avatrade.com said in a commentary.

    In Asian trading, Hong Kong’s Hang Seng climbed 1.6% to 19,898.91 while the Shanghai Composite index dropped 0.3% to 3,087.40. Hong Kong’s benchmark is down 14% for the year, while Shanghai’s has lost slightly more so far, at 14.2%.

    Tokyo’s Nikkei 225, which has given up 8.6% this year, fell 0.4% to 26,340.50 after the government reported that Japan’s industrial production fell for a third straight month in November and was likely to fall further in December.

    The Kospi in Seoul declined 2.2% to 2,280.45, while Australia’s S&P/ASX 200 dropped 0.3% to 7,086.40. Bangkok’s SET gained 0.3%.

    Trading on Wall Street is expected to be relatively light this holiday-shortened week as investors look ahead to 2023 after a dismal year for stocks.

    Uncertainty about how far the Federal Reserve and other central banks would go to fight the highest inflation in decades has kept investors on edge, even as price increases have eased. The Fed raised its key interest rate seven times this year and has signaled more hikes to come in 2023.

    The high rates weigh heavily on prices for stocks and other investments and have raised worries they might slow the economy too much, tipping it into a recession.

    In other trading, U.S. benchmark crude oil shed 54 cents to $78.99 per barrel in electronic trading on the New York Mercantile Exchange. It lost 3 cents on Tuesday to $79.53 per barrel.

    Brent crude, the pricing basis for international trading, declined 39 cents to $84.29 per barrel.

    The U.S. dollar rose to 134.01 Japanese yen from 133.43 yen. The euro was unchanged at $1.0641.

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  • Shares gain in Asia after China relaxes more COVID rules

    Shares gain in Asia after China relaxes more COVID rules

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    BANGKOK — Shares advanced Tuesday in Asia after China announced it would relax more of its pandemic restrictions despite widespread outbreaks of COVID-19 that are straining its medical systems and disrupting business.

    China’s National Health Commission said Monday that passengers arriving from abroad will no longer have to observe a quarantine, starting Jan. 8. They will still need a negative virus test within 48 hours of their departure and to wear masks on their flights.

    But it was the latest step toward dropping once-strict virus-control measures that have severely limited travel to and from the world’s No. 2 economy.

    China has joined other countries in treating cases instead of trying to stamp out infections, dropping or easing rules on testing, quarantines and movement as it tries to reverse an economic slump. But the shift has flooded hospitals with feverish, wheezing patients, and authorities are going door to door and paying people older than 60 to get vaccinated against COVID-19.

    The Shanghai Composite index jumped 0.8% to 3,089.39. Hong Kong’s markets were closed for a holiday, as were those in Australia.

    Tokyo’s Nikkei 225 added 0.3% to 26,476.27 and the Kospi in Seoul also gained 0.3%, to 2,323.52.

    In Bangkok, the SET index rose 0.6%, while the Sensex in Mumbai surged 1.2%.

    Markets in the U.S. and Europe were closed Monday for holidays and Asian markets were mostly higher.

    On Friday, the S&P 500 closed 0.6% higher. It is down 19.3% for the year, just on the cusp of a bear market.

    The Dow Jones Industrial Average rose 0.5%, while the tech-heavy Nasdaq edged 0.2% higher. The Russell 2000 index picked up 0.4%.

    Solid U.S. consumer spending and a strong jobs market have kept the economy growing, but they also raise the risk that the Federal Reserve will need to persist in raising interest rates and keeping them high to crush inflation.

    After last week’s updates, the last big reports of the year, investors will be watching for corporate earnings that may provide insights into how the economy is faring.

    The pace of price increases has eased, but the Fed has said it will keep raising interest rates to tame inflation. Its key overnight rate is at its highest level in 15 years, after beginning the year at a record low of near zero. The key lending rate, the federal funds rate, stands at a range of 4.25% to 4.5%, and Fed policymakers have forecast it will reach a range of 5% to 5.25% by the end of 2023 and not be cut before 2024.

    The higher rates bring the risk the economy could stall and slip into a recession in 2023. They also have been weighing heavily on prices for stocks and other investments.

    In other trading Tuesday, U.S. benchmark crude oil picked up 31 cents to $79.87 per barrel in electronic trading on the New York Mercantile Exchange. It gained $2.07 to $79.56 before markets closed for the long Christmas weekend holiday.

    Brent crude oil, the pricing basis for international trading, also added 31 cents to $84.81 per barrel.

    In currency dealings, the U.S. dollar rose to 132.96 Japanese yen from 132.89 yen late Monday. The euro rose to $1.0647 from $1.0638.

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  • Shares gain in Asia after China relaxes more COVID rules

    Shares gain in Asia after China relaxes more COVID rules

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    BANGKOK — Shares advanced Tuesday in Asia after China announced it would relax more of its pandemic restrictions despite widespread outbreaks of COVID-19 that are straining its medical systems and disrupting business.

    China’s National Health Commission said Monday that passengers arriving from abroad will no longer have to observe a quarantine, starting Jan. 8. They will still need a negative virus test within 48 hours of their departure and to wear masks on their flights.

    But it was the latest step toward dropping once-strict virus-control measures that have severely limited travel to and from the world’s No. 2 economy.

    China has joined other countries in treating cases instead of trying to stamp out infections, dropping or easing rules on testing, quarantines and movement as it tries to reverse an economic slump. But the shift has flooded hospitals with feverish, wheezing patients, and authorities are going door to door and paying people older than 60 to get vaccinated against COVID-19.

    The Shanghai Composite index jumped 0.8% to 3,089.39. Hong Kong’s markets were closed for a holiday, as were those in Australia.

    Tokyo’s Nikkei 225 added 0.3% to 26,476.27 and the Kospi in Seoul also gained 0.3%, to 2,323.52.

    In Bangkok, the SET index rose 0.6%, while the Sensex in Mumbai surged 1.2%.

    Markets in the U.S. and Europe were closed Monday for holidays and Asian markets were mostly higher.

    On Friday, the S&P 500 closed 0.6% higher. It is down 19.3% for the year, just on the cusp of a bear market.

    The Dow Jones Industrial Average rose 0.5%, while the tech-heavy Nasdaq edged 0.2% higher. The Russell 2000 index picked up 0.4%.

    Solid U.S. consumer spending and a strong jobs market have kept the economy growing, but they also raise the risk that the Federal Reserve will need to persist in raising interest rates and keeping them high to crush inflation.

    After last week’s updates, the last big reports of the year, investors will be watching for corporate earnings that may provide insights into how the economy is faring.

    The pace of price increases has eased, but the Fed has said it will keep raising interest rates to tame inflation. Its key overnight rate is at its highest level in 15 years, after beginning the year at a record low of near zero. The key lending rate, the federal funds rate, stands at a range of 4.25% to 4.5%, and Fed policymakers have forecast it will reach a range of 5% to 5.25% by the end of 2023 and not be cut before 2024.

    The higher rates bring the risk the economy could stall and slip into a recession in 2023. They also have been weighing heavily on prices for stocks and other investments.

    In other trading Tuesday, U.S. benchmark crude oil picked up 31 cents to $79.87 per barrel in electronic trading on the New York Mercantile Exchange. It gained $2.07 to $79.56 before markets closed for the long Christmas weekend holiday.

    Brent crude oil, the pricing basis for international trading, also added 31 cents to $84.81 per barrel.

    In currency dealings, the U.S. dollar rose to 132.96 Japanese yen from 132.89 yen late Monday. The euro rose to $1.0647 from $1.0638.

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  • Asian shares higher in thin holiday trading

    Asian shares higher in thin holiday trading

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    BANGKOK — Shares rose Monday in Asia in thin post-Christmas holiday trading, with markets in Hong Kong, Sydney and several other places closed.

    Tokyo’s Nikkei 225 index gained 0.6% to 26,393.32 and the Kospi in Seoul added 0.2% to 2,318.54. The Shanghai Composite index rose 0.5% to 3,061.93 and the SET in Bangkok added 0.6%.

    Bank of Japan Gov. Haruhiko Kuroda indicated in a widely watched speech Monday that the central bank does not intend to alter its longstanding policy of monetary easing to cope with pressures from inflation on the world’s third-largest economy.

    Last week, markets were jolted by a slight adjustment in the target range for the yield of long-term Japanese government bonds, viewing it as a sign the Bank of Japan might finally unwind its massive support for the economy through ultra-low interest rates and purchases of bonds and other assets.

    A widening gap between interest rates in Japan and other countries has pulled the Japanese yen sharply lower against the U.S. dollar and other currencies and accentuated the impact of higher costs for many imported products and commodities.

    But the BOJ has kept its key lending rate at minus 0.1%, cautious over risks of recession.

    Kuroda told the Keidanren, the country’s most powerful business group, that with economies facing likely downward pressure, and with Japan’s economy not fully recovered from the impacts of the pandemic, the BOJ “deems it necessary to conduct monetary easing and thereby firmly support the economy. …”

    On Friday, the S&P 500 reversed a 0.7% loss to close 0.6% higher, at 3,844.82. With one week left of trading in 2022, the benchmark index is down 19.3% for the year.

    The Dow Jones Industrial Average rose 0.5% to 33,203.93, while the tech-heavy Nasdaq edged 0.2% higher, to 10,497.86.

    Small company stocks also rose. The Russell 2000 index picked up 0.4% to 1,760.93.

    Mixed economic news weighed on stocks early on, but the indexes rebounded by late afternoon amid relatively light trading ahead of the long holiday weekend. U.S. and European markets will be closed Monday.

    Markets are in a tricky situation where relatively solid consumer spending and a strong employment market reduce the risk of a recession but also raise the threat of higher interest rates from the Federal Reserve as it presses its campaign to crush inflation.

    The government reported Friday that a key measure of inflation is continuing to slow, though the inflation gauge in the consumer spending report was still far higher than anyone wants to see. Also, growth in consumer spending weakened last month by more than expected, but incomes were a bit stronger than expected.

    Last week’s reports were the last big U.S. economic updates of the year. Investors will soon turn their focus to the next round of corporate earnings.

    The Fed has said it will keep raising interest rates to tame inflation, even though the pace of price increases has continued to ease. The Fed’s key overnight rate is at its highest level in 15 years, after beginning the year at a record low of roughly zero. The key lending rate, the federal funds rate, stands at a range of 4.25% to 4.5%, and Fed policymakers have forecast that the rate will reach a range of 5% to 5.25% by the end of 2023.

    Given the persistence of high inflation, “many are starting to believe the main story is that there will be no scope for Fed cuts in the year ahead and that central banks will maintain these relatively high rates until underlying inflation is truly cracked — and that process will take time,” Stephen Innes of SPI Asset Management said in a commentary.

    The Fed’s forecast doesn’t call for a rate cut before 2024, and the higher rates have raised concerns the economy could stall and slip into a recession in 2023. High rates have also been weighing heavily on prices for stocks and other investments.

    In currency dealings, the U.S. dollar slipped to 132.62 Japanese yen from 132.82 yen late Friday. The euro rose to $1.0629 from $1.0614.

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  • Asian shares higher in thin holiday trading

    Asian shares higher in thin holiday trading

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    BANGKOK — Shares rose Monday in Asia in thin post-Christmas holiday trading, with markets in Hong Kong, Sydney and several other places closed.

    Tokyo’s Nikkei 225 index gained 0.5% to 26,367.40 and the Kospi in Seoul added 0.2% to 2,317.48. The Shanghai Composite index surged 0.7% to 3,067.54 and the SET in Bangkok added 0.3%.

    Traders were awaiting a speech by the governor of Japan‘s central bank Monday for hints into whether the Bank of Japan might further adjust its longstanding ultra-lax monetary policy to cope with pressures from inflation.

    Last week, markets were jolted by a slight adjustment in the target range for the yield of long-term Japanese government bonds, viewing it as a sign the Bank of Japan might finally unwind its massive support for the economy through ultra-low interest rates and purchases of bonds and other assets.

    A widening gap between interest rates in Japan and other countries has pulled the Japanese yen sharply lower against the U.S. dollar and other currencies and accentuated the impact of higher costs for many imported products and commodities.

    But the BOJ has kept its key lending rate at minus 0.1%, cautious over risks of recession.

    On Friday, the S&P 500 reversed a 0.7% loss to close 0.6% higher, at 3,844.82. With one week left of trading in 2022, the benchmark index is down 19.3% for the year.

    The Dow Jones Industrial Average rose 0.5% to 33,203.93, while the tech-heavy Nasdaq edged 0.2% higher, to 10,497.86.

    Small company stocks also rose. The Russell 2000 index picked up 0.4% to 1,760.93.

    Mixed economic news weighed on stocks early on, but the indexes rebounded by late afternoon amid relatively light trading ahead of the long holiday weekend. U.S. and European markets will be closed Monday.

    Markets are in a tricky situation where relatively solid consumer spending and a strong employment market reduce the risk of a recession but also raise the threat of higher interest rates from the Federal Reserve as it presses its campaign to crush inflation.

    The government reported Friday that a key measure of inflation is continuing to slow, though it’s still far higher than anyone wants to see. The Federal Reserve monitors the inflation gauge in the consumer spending report, called the personal consumption expenditures price index, even more closely than it does the government’s better-known consumer price index.

    Also, growth in consumer spending weakened last month by more than expected, but incomes were a bit stronger than expected.

    A separate report from the University of Michigan indicating U.S. households are lowering their forecasts for upcoming inflation. That could help avoid a scenario the Federal Reserve has said often it’s desperate to prevent: a vicious cycle where shoppers rush to make purchases in advance of expected price rises, which would only worsen inflation.

    The latest round of reports were the last big U.S. economic updates of the year. Investors will soon turn their focus to the next round of corporate earnings.

    The Fed has said it will keep raising interest rates to tame inflation, even though the pace of price increases has continued to ease. The Fed’s key overnight rate is at its highest level in 15 years, after beginning the year at a record low of roughly zero. The key lending rate, the federal funds rate, stands at a range of 4.25% to 4.5%, and Fed policymakers have forecast that the rate will reach a range of 5% to 5.25% by the end of 2023.

    Given the persistence of high inflation, “many are starting to believe the main story is that there will be no scope for Fed cuts in the year ahead and that central banks will maintain these relatively high rates until underlying inflation is truly cracked — and that process will take time,” Stephen Innes of SPI Asset Management said in a commentary.

    The Fed’s forecast doesn’t call for a rate cut before 2024, and the higher rates have raised concerns the economy could stall and slip into a recession in 2023. High rates have also been weighing heavily on prices for stocks and other investments.

    In currency dealings, the U.S. dollar slipped to 132.53 Japanese yen from 132.82 yen late Friday. The euro rose to $1.0628 from $1.0614.

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  • How major US stock indexes fared Friday 12/23/2022

    How major US stock indexes fared Friday 12/23/2022

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    Stocks closed higher on Wall Street following a batch of mixed news on the economy.

    The S&P 500 rose 0.6% Friday. The benchmark index still wound up with its third weekly loss in a row.

    A key measure of inflation continued to slow, but it’s still far higher than anyone wants to see. Also, growth in consumer spending weakened last month by more than expected, but incomes were a bit stronger than expected. Markets are in a tricky spot where relatively solid economic data reduces the risk of a recession but also raises the threat of higher interest rates from the Federal Reserve.

    On Friday:

    The S&P 500 rose 22.43 points, or 0.6%, to 3,844.82.

    The Dow Jones Industrial Average rose 176.44 points, or 0.5%, to 33,203.93.

    The Nasdaq rose 21.74 points, or 0.2%, to 10,497.86.

    The Russell 2000 index of smaller companies rose 6.85 points, or 0.4%, to 1,760.93.

    For the week:

    The S&P 500 is down 7.54 points, or 0.2%.

    The Dow is up 283.47 points, or 0.9%.

    The Nasdaq is down 207.55 points, or 1.9%.

    The Russell 2000 is down 2.49 points, or 0.1%.

    For the year:

    The S&P 500 is down 921.36 points, or 19.3%.

    The Dow is down 3,134.37 points, or 8.6%.

    The Nasdaq is down 5,147.11 points, or 32.9%.

    The Russell 2000 is down 484.38 points, or 21.6%.

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  • Wall Street points modestly higher ahead of inflation report

    Wall Street points modestly higher ahead of inflation report

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    Wall Street pointed slightly higher in premarket trading Friday as investors await the government’s final inflation-related report of the year.

    Futures for the S&P 500 rose 0.2% and futures for the Dow Jones Industrials were up 0.3%.

    On tap Friday is the Commerce Department’s consumer spending report for November, which includes measure of inflation that is closely monitored by the Federal Reserve. The report for October showed that inflation eased somewhat, with prices rising 6% in October from a year earlier. That was the smallest increase since November 2021.

    Analysts surveyed by data firm FactSet expect that number to have fallen further, to 5.5% in November. That would be good news for American consumers, who have been squeezed by higher prices for just about everything for the past year-and-a-half.

    The Fed is believed to monitor the inflation gauge in the consumer spending report, called the personal consumption expenditures price index, even more closely than it does the government’s better-known consumer price index. But whether a projected half-percentage point decline would move Fed policymakers to soften their stance on future rate hikes remains to be seen.

    Last week, the central bank boosted its benchmark rate a half-point to a range of 4.25% to 4.5%, its highest level in 15 years. More surprisingly, the policymakers forecast that their key short-term rate will reach a range of 5% to 5.25% by the end of 2023. That suggests that the Fed is poised to raise its rate by an additional three-quarters of a point and leave it there through next year. That has many economists and investors expecting the U.S. economy to fall into recession in 2023.

    Japan reported its core inflation rate, excluding volatile fresh foods, rose to 3.7% in November, the highest level since 1981, as surging costs for oil and other commodities added to upward price pressures in the world’s third-largest economy.

    While the rate was much lower than in the U.S. and most major European and emerging economies, it adds to pressure on the Bank of Japan to adjust its own policies that have kept interest rates ultra-low to spur growth. For Japan, deflation — falling prices — rather than inflation has been the key concern for most of the past few decades. Recession in coming months remains the greater concern, economists say.

    “Inflation edged up in November and will peak at around 4% around the turn of the year, but we expect it to fall back below the Bank of Japan’s 2% target by mid-2023,” Capital Economics economist Marcel Thieliant said in a report.

    Tokyo’s Nikkei 225 index lost 1% to 26,242.58 and the Hang Seng in Hong Kong shed 0.5% to 19,578.44. The Shanghai Composite index was unchanged, at 3,054.52 and Australia’s S&P/ASX 200 declined 0.7% to 7,099.70.

    In Seoul, the Kospi dropped 1.4% to 2,323.09. Shares also fell in Bangkok, Mumbai and Taiwan.

    In Europe, London’s FTSE 100 was flat, while Frankfurt’s DAX rose 0.3%. The CAC 40 in Paris dipped 0.1%.

    In other trading Friday, U.S. benchmark crude oil rose $1.78 to $79.27 per barrel in electronic trading on the New York Mercantile Exchange. It fell 80 cents to $77.49 per barrel on Thursday.

    Brent crude oil, the pricing basis for international trading, advanced $1.61 to $83.28 per barrel.

    The U.S. dollar rose to 132.66 Japanese yen from 132.38 yen. The euro strengthened to $1.0622 from $1.0597.

    The S&P 500 fell 1.4% on Thursday after having been down as much as 2.9% earlier in the day. It closed at 3,822.39. The pullback brings Wall Street’s main measure of health back to a loss of nearly 20% for the year.

    The Dow Jones Industrial Average fell 1% to 33,027.49 and the Nasdaq closed 2.2% lower, at 10,476.12. The Russell 2000 index dropped 1.3% to 1,754.09.

    ——-

    Kurtenbach reported from Bangkok; Ott reported from Washington.

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  • World shares mixed before updates on spending, durable goods

    World shares mixed before updates on spending, durable goods

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    BANGKOK — Shares rose in Europe on Friday after a retreat in Asia ahead of updates on U.S. consumer spending and durable goods orders.

    Benchmarks climbed in London and Paris but fell in Hong Kong, Tokyo and Seoul. Oil prices surged more than $1 a barrel.

    Japan reported its core inflation rate, excluding volatile fresh foods, rose to 3.7% in November, the highest level since 1981, as surging costs for oil and other commodities added to upward price pressures in the world’s third-largest economy.

    While price increases are much more modest in Japan than in the U.S. and most major European and emerging economies, they add to pressure on the Bank of Japan to adjust longstanding policies that have kept interest rates ultra-low to spur growth. For Japan, deflation — falling prices — rather than inflation has been the key concern for most of the past few decades. Recession in coming months remains a greater concern, economists say.

    “Inflation edged up in November and will peak at around 4% around the turn of the year, but we expect it to fall back below the Bank of Japan’s 2% target by mid-2023,” Capital Economics economist Marcel Thieliant said in a report.

    The Fed has already hiked its key overnight rate to its highest level in 15 years. It began the year at a record low of near zero. Many economists and investors expect a recession to hit the U.S. economy in 2023.

    Tokyo’s Nikkei 225 index lost 1% to 26,235.25 and the Hang Seng in Hong Kong shed 0.4% to 19,593.06. The Shanghai Composite index dropped 0.3% to 3,045.87 and Australia’s S&P/ASX 200 declined 0.6% to 7,107.70.

    In Seoul, the Kospi dropped 1.8% to 2,313.69. Shares also fell in Mumbai and Taiwan but were flat in Bangkok.

    Good economic data should be positive for markets when recession may be looming, but the reports Thursday suggested the Federal Reserve may need to keep hiking interest rates and keep them high to curb inflation.

    On Friday, the U.S. government will report on personal income and spending and on durable goods orders, among other data.

    The Fed is particularly worried about a still-strong job market giving more oxygen to inflation, which has eased a bit in recent months but is still near the highest level in decades. A report Thursday said employers laid off fewer workers last week than expected. Another report showed that the broad U.S. economy expanded at a more robust pace during the summer than earlier estimated.

    The S&P 500 fell 1.4% on Thursday after having been down as much as 2.9% earlier in the day. The pullback brings Wall Street’s main measure of health back to a loss of nearly 20% for the year.

    The Dow Jones Industrial Average fell 1% and the Nasdaq closed 2.2% lower. The Russell 2000 index dropped 1.3%.

    Trading has been topsy-turvy across Wall Street recently as reports paint a mixed portrait of the economy.

    High-growth technology stocks have taken some of the year’s worst hits because they’re seen as some of the most vulnerable to rising rates.

    Electric vehicle maker Tesla is smarting from rising interest rates and with issues specific to itself and its CEO, Elon Musk. It tumbled 8.9%, bringing its loss for the year to around 64%. It’s taking the rare step of offering discounts on its two top-selling models through year’s end, an indication demand is slowing.

    Worries are rising broadly about corporate profits across industries, which are contending with the weight of higher interest rates, still-high inflation and rising costs rise due to payroll and other expenses. Weaker corporate profits could further erode support for stocks, after profits strengthened through much of 2022.

    Meanwhile, the housing industry and other areas of the economy whose fortunes are closely tied to low interest rates are suffering.

    In other trading Friday, U.S. benchmark crude oil rose $1.50 to $78.99 per barrel in electronic trading on the New York Mercantile Exchange. It fell 80 cents to $77.49 per barrel on Thursday.

    Brent crude oil, the pricing basis for international trading, advanced $1.43 to $83.10 per barrel.

    The U.S. dollar rose to 132.62 Japanese yen from 132.38 yen. The euro strengthened to $1.0612 from $1.0597.

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  • US stocks slide as economic data stokes rate hike worries

    US stocks slide as economic data stokes rate hike worries

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    NEW YORK — Stocks closed broadly lower on Wall Street Thursday as stronger-than-expected reports on the U.S. economy stoked worries about interest rates staying high.

    The S&P 500 fell 1.4% after having been down as much as 2.9% earlier in the day. The pullback brings Wall Street’s main measure of health back to a loss of nearly 20% for the year. The Dow Jones Industrial Average fell 1% and the Nasdaq closed 2.2% lower.

    The selling was broad, with all 11 industry sectors in the S&P 500 ending up in the red. Technology stocks were the biggest drag on the benchmark index. Chipmaker Nvidia slumped 7%.

    Usually, good data on the economy would be positive for markets, particularly when worries are high about a possible recession looming. But Thursday’s reports suggested the Federal Reserve may indeed follow through on its pledge to keep hiking interest rates and to hold them at a high level for a while in order to get inflation under control.

    The Fed is particularly worried about a still-strong job market giving more oxygen to inflation, which has come down a bit in recent months but remains close to its highest level in decades. One report on Thursday indicated employers laid off fewer workers last week than expected, while a separate report showed that the broad U.S. economy grew more strongly during the summer than forecast.

    The reports forced a reminder of a longstanding mantra on Wall Street: Don’t fight the Fed. When it’s raising interest rates, the Fed is intentionally slowing the economy and increasing the risks of a potential recession. Higher rates also drag down on prices for stocks and other investments.

    High-growth technology stocks have taken some of the year’s worst hits because they’re seen as some of the most vulnerable to rising rates. A discouraging profit report from chipmaker Micron Technology cast even more of a pall on the industry Thursday.

    Micron fell 3.4% after it gave a weaker forecast for upcoming earnings than analysts expected as it faces softening demand.

    Electric vehicle maker Tesla has also felt big pain from rising interest rates, though it’s also dealing with issues specific to itself and its CEO, Elon Musk. It tumbled 8.9%, bringing its loss for the year to around 64%. It’s taking the rare step of offering discounts on its two top-selling models through year’s end, an indication demand is slowing.

    Worries are rising broadly about corporate profits across industries, which are contending with the weight of higher interest rates, still-high inflation and rising costs rise due to payroll and other expenses. A drop-off in corporate profits in 2023 could knock out another support for stocks, after profits strengthened through much of 2022.

    Used-auto retailer CarMax dropped 3.7% after it reported much weaker profit for its latest quarter than analysts expected.

    The market’s slide eased toward the end of the day, leaving major indexes to finish off the day’s lows. The S&P 500 dropped 56.05 points to 3,822.39. The Dow, which had been down 803 points, finished down 348.99 points at 33,027.49. The tech-heavy Nasdaq fell 233.25 points to close at 10,476.12.

    Small-company stocks also fell. The Russell 2000 index dropped 22.85 points, or 1.3%, to 1,754.09.

    Trading has been topsy-turvy across Wall Street recently as reports paint a mixed portrait of the economy.

    The housing industry and other areas of the economy whose fortunes are closely tied to low interest rates have already shown sharp downturns. But consumer confidence has strengthened recently, offering hope for the biggest and most important part of the economy: consumer spending.

    Inflation has been moderating since peaking in the summer, which at times has raised hopes on Wall Street that the Fed may back off its tough talk on interest rates. But Fed officials continue to hammer the message that they’ll hike rates further in 2023 and don’t envision a cut to rates before 2024.

    The Fed has already hiked its key overnight rate up to its highest level in 15 years, after it began the year at a record low of roughly zero. That has a growing number of economists and investors are predicting a recession will hit the U.S. economy in 2023.

    And the Fed is just one of many central banks around the world hiking rates at an explosive clip. Even the Bank of Japan, which has been a holdout in keeping interest rates super-low this year, this week made moves that would allow some rates to rise a bit.

    The yield on the two-year U.S. Treasury, which tends to track expectations for Fed action, rose to 4.26% from 4.22% late Wednesday.

    The 10-year yield, which helps dictate rates for mortgages and other economy-setting loans, rose to 3.68% from 3.67% a day earlier.

    ———

    AP Business Writers Elaine Kurtenbach and Matt Ott contributed to this report. Veiga reported from Los Angeles.

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  • World shares mostly higher after slight gains on Wall St

    World shares mostly higher after slight gains on Wall St

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    BANGKOK — European shares were higher Wednesday after a mixed session in Asia in the absence of major data releases.

    Germany’s DAX rose 0.7% to 13,987.59 while the CAC 40 in Paris jumped 1% to 6,514.30. Britain’s FTSE 100 gained 0.5% to 7,407.92.

    The future for the S&P 500 advanced 0.7% while that for the Dow Jones Industrial Average surged 0.8%.

    Tokyo’s benchmark Nikkei 225 index slipped 0.7%, to 26,387.72, a day after the Bank of Japan gave in to pressure on the yen by expanding the cap on the yield of the 10-year Japanese government bond to 0.50%. It had been 0.25%.

    On Tuesday, the Nikkei 225 lost 2.5%.

    The Japanese central bank has kept its key lending rate at minus 0.1% for years, trying to spur growth by keeping credit ultra cheap. The slight softening of its stance against raising interest rates to cut inflation rattled world markets Tuesday, with bond yields pushing higher.

    Higher yields make borrowing more expensive, slowing the economy. That can alleviate upward pressure on prices, but it also pulls prices for stocks and other investments lower.

    The widening gap between the BOJ’s benchmark rate and rising interest rates in the U.S. and other economies has weakened the yen against the U.S. dollar and other currencies, causing prices for imported oil, consumer goods and industrial inputs to surge and adding to pressures on its economy.

    “Ultimately, the BOJ is reacting to a dysfunctioning bond market and a weakening yen. But the move also represents the fall of one of the last central bank hold-outs of ultra-low rate policy,” Stephen Innes of SPI Asset Management said in a commentary.

    Central banks around the world have been raising rates at an explosive clip and a growing number of economists and investors see a recession hitting in 2023. Both the Federal Reserve and European Central Bank have pledged to keep raising rates into next year to be sure they get inflation under control.

    At the same time, fresh waves of COVID-19 infections in China, Japan and other countries are casting a shadow over pandemic recoveries.

    In other Asian trading, Hong Kong’s Hang Seng gained 0.3% to 19,160.49 and the Shanghai Composite index slipped 0.2% to 3,068.41.

    South Korea’s Kospi lost 0.2% to 2,328.95. In Sydney, the S&P/ASX 200 gained 1.3% to 7,115.10. Shares rose in Bangkok and Taiwan but fell in Mumbai.

    On Tuesday, the S&P 500 rose 0.1% while the Dow industrials climbed 0.3%. The Nasdaq composite barely budged, closing less than 0.1% higher. Small company stocks outdid the broader market, lifting the Russell 2000 index 0.5%.

    The yield on the 10-year Treasury rose to 3.70% from 3.59% late Monday. That yield helps set rates for mortgages and other economy-setting loans, which has already meant particular pain for the U.S. housing market.

    The two-year U.S. Treasury yield, which tends to more closely track expectations for action from the Federal Reserve, was more reserved. It held steady at 4.26%.

    In the foreign exchange market, the dollar rose to 131.70 Japanese yen from 131.62 yen. Tokyo’s surprise move on Tuesday had pulled the dollar 4% lower against the yen.

    The euro fell to $1.0615 from $1.0626.

    U.S. benchmark crude oil gained 77 cents to $77.00 per barrel in electronic trading on the New York Mercantile Exchange. It gained 1.2% on Tuesday.

    Brent crude, the pricing basis for international trading, picked up 85 cents to $80.84 per barrel.

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  • Asian stock markets sink under global recession fears

    Asian stock markets sink under global recession fears

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    BEIJING — Asian stock markets fell again Monday as investors wrestled with fears the Federal Reserve and European central banks might be willing to cause a recession to crush inflation.

    Shanghai, Tokyo, Hong Kong and Sydney declined. Oil prices rose.

    Wall Street fell Friday after the Fed raised its forecast of how long interest rates have to stay elevated to cool inflation that is near a four-decade high. The European Central Bank warned more rate hikes are coming.

    That “hawkish rhetoric” indicates “mounting pipeline risks of a global recession,” said Tan Boon Heng of Mizuho Bank in a report.

    The Shanghai Composite Index lost 1.4% to 3,122.63 despite the ruling Communist Party announcing Friday it will try to reverse China’s economic slump by stimulating domestic consumption and the real estate market.

    The Nikkei 225 in Tokyo sank 1.1% to 27,223.72 and the Hang Seng in Hong Kong shed 0.6% to 19,326.18.

    The Kospi in Seoul retreated 0.6% to 2,344.57 and Sydney’s S&P-ASX 200 was 0.2% lower at 7,134.00.

    India’s Sensex opened down 0.8% at 61,337.81. Singapore and Bangkok advanced while New Zealand and other Southeast Asian markets declined.

    On Friday, Wall Street’s benchmark S&P 500 index lost 1.1% to 3,852.36 as it turned in its second weekly decline. It is down about 19% this year.

    The Dow Jones Industrial Average dropped 0.8% to 32,920.46. The Nasdaq composite lost 1% to 10,705.41.

    More than 80% of stocks in the benchmark S&P 500 fell. Technology and health care stocks were among the biggest weights on the market. Microsoft fell 1.7% and Pfizer slid 4.1%.

    U.S. inflation has eased to 7.1% over a year earlier in November from June’s 9.1% high but still is painfully high.

    The Fed on Wednesday raised its benchmark short-term lending rate by one-half percentage point for its seventh hike this year. That dashed hopes the U.S. central bank might ease off increases due to signs inflation and economic activity are cooling.

    The federal funds rate stands at a 15-year high of 4.25% to 4.5%. The Fed forecast that will reach a range of 5% to 5.25% by the end of 2023. Its forecast doesn’t call for a rate cut before 2024.

    In energy markets, U.S. benchmark crude rose 64 cents to $74.93 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.82 on Friday to $74.29. Brent crude, the price basis for international oil trading, gained 68 cents to $79.72 per barrel in London. It lost $2.17 the previous session to $79.04.

    The dollar declined to 136.20 yen from Friday’s 136.56 yen. The euro gained to $1.0603 from $1.0600.

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  • Asian stock markets sink under global recession fears

    Asian stock markets sink under global recession fears

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    BEIJING — Asian stock markets fell again Monday as investors wrestled with fears the Federal Reserve and European central banks might be willing to cause a recession to crush inflation.

    Shanghai, Tokyo, Hong Kong and Sydney declined. Oil prices rose by almost $1 per barrel but benchmark U.S. crude stayed below $80.

    Wall Street fell Friday after the Fed raised its forecast of how long interest rates have to stay elevated to cool inflation that is near a four-decade high. The European Central Bank warned more rate hikes are coming.

    That “hawkish rhetoric” indicates “mounting pipeline risks of a global recession,” said Tan Boon Heng of Mizuho Bank in a report.

    The Shanghai Composite Index lost 1.3% to 3,127.78 despite China’s ruling Communist Party announcing Friday that it will try to reverse an economic slump by stimulating domestic consumption and the real estate market.

    The Nikkei 225 in Tokyo sank 1.1% to 27,218.28 and the Hang Seng in Hong Kong shed 0.7% to 19,316.58.

    The Kospi in Seoul retreated 0.4% to 2,350.27 and Sydney’s S&P-ASX 200 was 0.2% lower at 7,137.00. Singapore advanced while New Zealand and other Southeast Asian markets declined.

    Wall Street’s benchmark S&P 500 index turned in its second weekly decline after losing 1.1% to 3,852.36 on Friday for its third daily drop. It is down about 19% so far this year.

    The Dow Jones Industrial Average dropped 0.8% to 32,920.46. The Nasdaq composite lost 1% to 10,705.41.

    More than 80% of stocks in the benchmark S&P 500 fell. Technology and health care stocks were among the biggest weights on the market. Microsoft fell 1.7% and Pfizer slid 4.1%.

    U.S. inflation has eased to 7.1% over a year earlier in November from June’s 9.1% high but still is painfully high.

    The Fed on Wednesday raised its benchmark short-term lending rate by one-half percentage point for its seventh hike this year. That dashed hopes the U.S. central bank might ease off increases due to signs inflation and economic activity are cooling.

    The federal funds rate stands at a 15-year high of 4.25% to 4.5%. The Fed forecast that will reach a range of 5% to 5.25% by the end of 2023. Its forecast doesn’t call for a rate cut before 2024.

    In energy markets, U.S. benchmark crude rose 94 cents to $75.23 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.82 on Friday to $74.29. Brent crude, the price basis for international oil trading, gained $1.01 to $80.05 per barrel in London. It lost $2.17 the previous session to $79.04.

    The dollar declined to 136.25 yen from Friday’s 136.56 yen. The euro gained to $1.0609 from $1.0600.

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  • Asian stock markets sink under global recession fears

    Asian stock markets sink under global recession fears

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    BEIJING — Asian stock markets fell again Monday as investors wrestled with fears the Federal Reserve and European central banks might be willing to cause a recession to crush inflation.

    Shanghai, Tokyo, Hong Kong and Sydney declined. Oil prices rose by almost $1 per barrel but benchmark U.S. crude stayed below $80.

    Wall Street fell Friday after the Fed raised its forecast of how long interest rates have to stay elevated to cool inflation that is near a four-decade high. The European Central Bank warned more rate hikes are coming.

    That “hawkish rhetoric” indicates “mounting pipeline risks of a global recession,” said Tan Boon Heng of Mizuho Bank in a report.

    The Shanghai Composite Index lost 1.3% to 3,127.78 despite China’s ruling Communist Party announcing Friday that it will try to reverse an economic slump by stimulating domestic consumption and the real estate market.

    The Nikkei 225 in Tokyo sank 1.1% to 27,218.28 and the Hang Seng in Hong Kong shed 0.7% to 19,316.58.

    The Kospi in Seoul retreated 0.4% to 2,350.27 and Sydney’s S&P-ASX 200 was 0.2% lower at 7,137.00. Singapore advanced while New Zealand and other Southeast Asian markets declined.

    Wall Street’s benchmark S&P 500 index turned in its second weekly decline after losing 1.1% to 3,852.36 on Friday for its third daily drop. It is down about 19% so far this year.

    The Dow Jones Industrial Average dropped 0.8% to 32,920.46. The Nasdaq composite lost 1% to 10,705.41.

    More than 80% of stocks in the benchmark S&P 500 fell. Technology and health care stocks were among the biggest weights on the market. Microsoft fell 1.7% and Pfizer slid 4.1%.

    U.S. inflation has eased to 7.1% over a year earlier in November from June’s 9.1% high but still is painfully high.

    The Fed on Wednesday raised its benchmark short-term lending rate by one-half percentage point for its seventh hike this year. That dashed hopes the U.S. central bank might ease off increases due to signs inflation and economic activity are cooling.

    The federal funds rate stands at a 15-year high of 4.25% to 4.5%. The Fed forecast that will reach a range of 5% to 5.25% by the end of 2023. Its forecast doesn’t call for a rate cut before 2024.

    In energy markets, U.S. benchmark crude rose 94 cents to $75.23 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.82 on Friday to $74.29. Brent crude, the price basis for international oil trading, gained $1.01 to $80.05 per barrel in London. It lost $2.17 the previous session to $79.04.

    The dollar declined to 136.25 yen from Friday’s 136.56 yen. The euro gained to $1.0609 from $1.0600.

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  • Wall Street may get much worse in 2023 before getting better

    Wall Street may get much worse in 2023 before getting better

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    NEW YORK (AP) — The worst may be yet to come for the stock market.

    Wall Street’s mini-rebound since mid-October has recovered some of the index’s sharp losses from the first 10 months of the year. It closed Monday a shade below 4,000, up more than 10% since its bottom two months earlier.

    Many analysts expect stocks to end 2023 at least around this range, if not a bit higher, after the Federal Reserve finally stops hiking interest rates in order to get high inflation under control. But before getting to that end point, much of Wall Street is also forecasting stock prices to fall sharply in the interim.

    Consider Morgan Stanley, which says the S&P 500 could drop all the way to a range between 3,000 and 3,300 during the first three months of the new year. That would mean it loses up to a quarter of its value from Monday’s closing level. The low end of that range would also be 37.5% below the record set in early 2022.

    The reason for the bank’s pessimism is that its strategists forecast much weaker corporate profits than the rest of Wall Street. On the revenue side, businesses are feeling pressure as manufacturing and other areas of the economy are weakening. At the same time, Morgan Stanley says profits will get squeezed on the other end by higher wage costs after businesses had to give workers’ raises.

    Corporate profits will likely be coming off record levels from 2022, which helped companies return more cash to investors through dividends and stock buybacks.

    To be sure, the strategists led by Michael Wilson say the S&P 500 could end 2023 at 3,900 if things go mostly as they expect, not far from its current level.

    Strategists at Goldman Sachs also forecast a trough during the first half of the year, possibly at 3,600. That would mark a nearly 10% drop from Monday’s close, and it’s based on Goldman Sachs’ expectation that the economy can avoid a recession.

    If the economy does contract as many on Wall Street expect, Goldman strategists led by David Kostin said the S&P 500 could fall all the way to 3,100.

    At Deutsche Bank, strategists see the U.S. economy falling into a recession in the second half of 2023. That could pull the S&P 500 down to 3,250 before it hits bottom about halfway through the recession, which the German bank sees lasting the last six months of the year. Then, the S&P 500 could end the year as high as 4,500 if stocks follow their typical playbook around recessions, say the strategists led by Binky Chadha.

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  • Wall Street loses ground, marking 2nd straight weekly loss

    Wall Street loses ground, marking 2nd straight weekly loss

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    Wall Street racked up more losses Friday, as worries mounted that the Federal Reserve and other central banks are willing to bring on a recession if that’s what it takes to crush inflation.

    The S&P 500 fell 1.1%, its third straight drop. The Dow Jones Industrial Average dropped 0.8% and the Nasdaq composite lost 1%. The major indexes marked their second straight weekly loss.

    The pullback was broad. More than 80% of stocks in the benchmark S&P 500 fell. Technology and health care stocks were among the biggest weights on the market. Microsoft fell 1.7% and Pfizer slid 4.1%.

    The Fed this week raised its forecast for how high it will ultimately take interest rates and tried to dash some investors’ hopes that rate cuts may happen next year. In Europe, the central bank came off as even more aggressive in many investors’ eyes.

    “Inflation continues to be the monster in the room,” said Liz Young, head of investment strategy at SoFi.

    Inflation has been easing from its hottest levels in decades, but remains painfully high. That has prompted the Fed to maintain its aggressive attack on prices by raising interest rates to slow economic growth. The strategy increasingly risks slamming on the brakes too hard and sending an already slowing economy into a recession.

    “Whether it’s a mild, medium, or deep recession is still unknown,” Young said.

    A mixed report from S&P Global on Friday highlighted the recession risk. It showed that business activity slowed more than expected this month as inflation squeezes companies. It also noted that it was the sharpest drop since May of 2020, but that inflation pressures have also been easing.

    “In short, the survey data suggest that Fed rate hikes are having the desired effect on inflation, but that the economic cost is building and recession risks are consequently mounting,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said.

    The S&P 500 fell 43.39 points to 3,852.36. It’s now down about 19% this year. The Dow dropped 281.76 points to finish at 32,920.46. The Nasdaq slid 105.11 points to 10,705.41.

    Small company stocks had more moderate losses than the broader market. The Russell 2000 fell 11.19 points, or 0.6%, to 1,763.42.

    Bond yields were mixed. The yield on the 10-year Treasury, which influences mortgage rates, rose to 3.49% from 3.45% late Thursday. The yield on the two-year Treasury, which closely tracks expectations for Fed moves, fell to 4.21% from 4.24% late Thursday.

    The Fed on Wednesday ended its final meeting of the year by raising its short-term interest rate by half a percentage point, its seventh straight increase this year. Wall Street had been hoping that the central bank would signal an easing of rate increases heading into 2023, but the Fed instead signaled the opposite.

    The federal funds rate stands at a range of 4.25% to 4.5%, the highest level in 15 years. Fed policymakers forecast that the central bank’s rate will reach a range of 5% to 5.25% by the end of 2023. Their forecast doesn’t call for a rate cut before 2024.

    Several companies bucked the broader losses on Friday after reporting strong financial results and forecasts. Software maker Adobe rose 3% after topping Wall Street’s fiscal fourth-quarter earnings forecasts. United States Steel gained 5.8% after giving investors a strong earnings forecast.

    ——

    Elaine Kurtenbach and Matt Ott contribute to this report.

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  • How major US stock indexes fared Friday 12/16/2022

    How major US stock indexes fared Friday 12/16/2022

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    Stocks ended lower on Wall Street as worries grow that the Federal Reserve and other central banks are willing to bring on a recession if that’s what it takes to get inflation under control.

    The S&P 500 fell 1.1% Friday, closing out its second straight weekly loss. The Dow and the Nasdaq also fell.

    The Fed this week raised its forecast for how high it will ultimately take interest rates and tried to dash some investors’ hopes that rate cuts may happen next year. In Europe, the central bank came off as even more aggressive in many investors’ eyes.

    On Friday:

    The S&P 500 fell 43.39 points, or 1.1%, to 3,852.36.

    The Dow Jones Industrial Average fell 281.76 points, or 0.8%, to 32,920.46.

    The Nasdaq fell 105.11 points, or 1%, to 10,705.41.

    The Russell 2000 index of smaller companies fell 11.19 points, or 0.6%, to 1,763.42.

    For the week:

    The S&P 500 is down 82.02 points, or 2.1%.

    The Dow is down 556 points, or 1.7%.

    The Nasdaq is down 299.20 points, or 2.7%.

    The Russell 2000 is down 33.24 points, or 1.9%.

    For the year:

    The S&P 500 is down 913.82 points, or 19.2%.

    The Dow is down 3,417.84 points, or 9.4%.

    The Nasdaq is down 4,939.56 points, or 31.6%.

    The Russell 2000 is down 481.89 points, or 21.5%.

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  • Asian shares decline after retreats on Wall Street, Europe

    Asian shares decline after retreats on Wall Street, Europe

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    BANGKOK — Asian shares followed Wall Street and Europe lower on Friday, with markets jittery over the risk that the Federal Reserve and other central banks may end up bringing on recessions to get inflation under control.

    Oil prices and U.S. futures edged higher.

    China’s move to relax COVID restrictions has raised hopes for an end to massive disruptions from lockdowns and other strict measures to prevent infections. But signs of sharply rising case numbers have raised uncertainty, with some alarmed over the possibility that the pandemic will continue to drag on the economy.

    Hong Kong’s Hang Seng edged 0.1% higher to 19,395.84, while the Shanghai Composite index shed 0.4% to 3,157.58.

    Tokyo’s Nikkei 225 lost 2% to 27,498.14 after a survey of manufacturers showed a further contraction in output.

    The preliminary reading of a factory purchasing manager’s index put manufacturing at 48.8, down from November’s 49.0, on 0-100 scale where 50 marks the break between contraction and expansion.

    “This is consistent with the downbeat production forecasts issued by firms. Lingering weakness in demand was likely the main cause,” Capital Economics said in a report.

    The Kospi in Seoul lost 0.4% to 2,349.92, while Australia’s S&P/ASX 200 declined 0.8% to 7,148.70.

    Shares in Taiwan fell 1.4% and the SET in Bangkok lost 0.4%. Mumbai dropped 1.4%.

    On Thursday, the S&P 500 fell 2.5% to 3,895.75, erasing its gains from early in the week. The tech-heavy Nasdaq composite lost 3.2% to 10,810.53 and the Dow gave back 2.2% to 33,202.22.

    The Russell 2000 index slid 2.5% to 1,774.61.

    The wave of selling came as central banks in Europe raised interest rates a day after the U.S. Federal Reserve hiked its key rate again, emphasizing that interest rates will need to go higher than previously expected in order to tame inflation.

    European stocks fell sharply, with Germany’s DAX dropping 3.3%.

    Like the Fed, central bank officials in Europe said inflation is not yet corralled and that more rate hikes are coming.

    “We are in for a long game,” European Central Bank President Christine Lagarde said at a news conference.

    The Fed raised its short-term interest rate by half a percentage point on Wednesday, its seventh increase this year. Central banks in Europe followed along Thursday, with the European Central Bank, Bank of England and Swiss National Bank each raising their main lending rate by a half-point Thursday.

    Although the Fed is slowing the pace of its rate increases, the central bank signaled it expects rates to be higher over the coming few years than it had previously anticipated. That disappointed investors who hoped recent signs that inflation is easing would persuade the Fed to lighten up on the brakes it’s applying to the U.S. economy.

    The federal funds rate stands at a range of 4.25% to 4.5%, the highest level in 15 years. Fed policymakers forecast that the central bank’s rate will reach a range of 5% to 5.25% by the end of 2023. Their forecast doesn’t call for a rate cut before 2024.

    The yield on the two-year Treasury, which closely tracks expectations for Fed moves, rose to 4.24% from 4.21% late Wednesday. The yield on the 10-year Treasury, which influences mortgage rates, slipped to 3.45% from 3.48%.

    The three-month Treasury yield slipped to 4.31%, but remains above that of the 10-year Treasury. That’s known as an inversion and considered a strong warning that the economy could be headed for a recession.

    The central bank has been fighting to lower inflation at the same time that pockets of the economy, including employment and consumer spending, remain strong. That has made it more difficult to rein in high prices on everything from food to clothing.

    On Thursday, the government reported that the number of Americans applying for unemployment benefits fell last week, a sign that the labor market remains strong. Meanwhile, another report showed that retail sales fell in November. That pullback followed a sharp rise in October.

    In other trading Friday, benchmark U.S. crude oil lost 25 cents to $75.86 a barrel in electronic trading on the New York Mercantile Exchange. It lost $1.17 on Thursday to $76.11 per barrel.

    Brent crude, the pricing basis for international trading, shed 24 cents to $80.97 per barrel.

    The dollar fell to 137.36 Japanese yen from 137.81 yen late Thursday. The euro rose to $1.0431 from $1.0627.

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  • Asian shares decline after retreats on Wall Street, Europe

    Asian shares decline after retreats on Wall Street, Europe

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    BANGKOK — Asian shares followed Wall Street and Europe lower on Friday, with markets jittery over the risk that the Federal Reserve and other central banks may end up bringing on recessions to get inflation under control.

    Oil prices and U.S. futures edged higher.

    China’s move to relax COVID restrictions has raised hopes for an end to massive disruptions from lockdowns and other strict measures to prevent infections. But signs of sharply rising case numbers have raised uncertainty, with some alarmed over the possibility that the pandemic will continue to drag on the economy.

    Hong Kong’s Hang Seng was flat, at 19,369.65 while the Shanghai Composite index shed 0.3% to 3,160.67.

    Tokyo’s Nikkei 225 lost 1.7% to 27,569.56 after a survey of manufacturers showed a further contraction in output.

    The Kospi in Seoul edged 0.2% lower to 2,357.97, while Australia’s S&P/ASX 200 declined 0.3% to 7,180.50.

    Shares in Taiwan fell 1.2% and the SET in Bangkok lost 0.2%. Mumbai dropped 1.4%.

    On Thursday, the S&P 500 fell 2.5% to 3,895.75, erasing its gains from early in the week. The tech-heavy Nasdaq composite lost 3.2% to 10,810.53 and the Dow gave back 2.2% to 33,202.22.

    The wave of selling came as central banks in Europe raised interest rates a day after the U.S. Federal Reserve hiked its key rate again, emphasizing that interest rates will need to go higher than previously expected in order to tame inflation.

    European stocks fell sharply, with Germany’s DAX dropping 3.3%.

    Like the Fed, central bank officials in Europe said inflation is not yet corralled and that more rate hikes are coming.

    “We are in for a long game,” European Central Bank President Christine Lagarde said at a news conference.

    Small company stocks also fell. The Russell 2000 index slid 2.5% to close at 1,774.61.

    The Fed raised its short-term interest rate by half a percentage point on Wednesday, its seventh increase this year. Central banks in Europe followed along Thursday, with the European Central Bank, Bank of England and Swiss National Bank each raising their main lending rate by a half-point Thursday.

    Although the Fed is slowing the pace of its rate increases, the central bank signaled it expects rates to be higher over the coming few years than it had previously anticipated. That disappointed investors who hoped recent signs that inflation is easing somewhat would persuade the Fed to take some pressure off the brakes it’s applying to the U.S. economy.

    The federal funds rate stands at a range of 4.25% to 4.5%, the highest level in 15 years. Fed policymakers forecast that the central bank’s rate will reach a range of 5% to 5.25% by the end of 2023. Their forecast doesn’t call for a rate cut before 2024.

    The yield on the two-year Treasury, which closely tracks expectations for Fed moves, rose to 4.24% from 4.21% late Wednesday. The yield on the 10-year Treasury, which influences mortgage rates, slipped to 3.45% from 3.48%.

    The three-month Treasury yield slipped to 4.31%, but remains above that of the 10-year Treasury. That’s known as an inversion and considered a strong warning that the economy could be headed for a recession.

    The central bank has been fighting to lower inflation at the same time that pockets of the economy, including employment and consumer spending, remain strong. That has made it more difficult to rein in high prices on everything from food to clothing.

    On Thursday, the government reported that the number of Americans applying for unemployment benefits fell last week, a sign that the labor market remains strong. Meanwhile, another report showed that retail sales fell in November. That pullback followed a sharp rise in spending in October.

    In other trading Friday, benchmark U.S. crude oil gained 38 cents to $76.49 a barrel in electronic trading on the New York Mercantile Exchange. It lost $1.17 on Thursday to $76.11 per barrel.

    Brent crude, the pricing basis for international trading, added 49 cents to $81.70 per barrel.

    The dollar fell to 137.25 Japanese yen from 137.81 yen late Thursday. The euro rose to $1.0651 from $1.0627.

    ——

    AP Business Writers Damian J. Troise and Alex Veiga contributed.

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  • US Fed hikes interest rates by 0.5 percent, says more to come

    US Fed hikes interest rates by 0.5 percent, says more to come

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    The US central bank projected interest rates rising to 5.1 percent in 2023, higher than what investors expected.

    The US Federal Reserve raised interest rates by half a percentage point on Wednesday and projected at least an additional 0.75 percent of increases in borrowing costs by the end of 2023 as well as a rise in unemployment and a near stalling of economic growth.

    The United States central bank’s projection of the target federal funds rate rising to 5.1 percent in 2023 is slightly higher than investors expected heading into this week’s two-day policy meeting and appeared biased if anything to move higher.

    Only two of 19 Fed officials saw the benchmark overnight interest rate staying below 5 percent next year, a signal they still feel the need to lean into their battle against inflation that has been running at 40-year highs.

    “The [Federal Open Market] Committee is highly attentive to inflation risks … Ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time,” the Fed said in a statement nearly identical to the one it issued at its November meeting.

    The new statement, approved unanimously, was released after a meeting at which officials scaled back from the three-quarters-of-a-percentage-point rate increases that were delivered at the last four gatherings. The Fed’s policy rate, which began the year at the near-zero level, is now in a target range of 4.25 percent to 4.5 percent, the highest since late 2007.

    The new rate outlook, a rough estimate of where officials feel they can pause their current rate-hike cycle, was issued along with economic projections showing an extended battle with inflation still to come, and with near recessionary conditions developing over the year.

    Inflation, based on the Fed’s preferred measure, is seen remaining above the central bank’s 2 percent target at least until the end of 2025, and will still be above 3 percent by the end of next year.

    The median projected unemployment rate is seen rising to 4.6 percent over the next year from the current 3.7 percent, an increase that exceeds the level historically associated with a recession.

    Gross domestic product is seen growing by just 0.5 percent next year, the same as estimated for 2022, before rising to 1.6 percent in 2024 and 1.8 percent in 2025, a level considered to be the economy’s long-run potential.

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  • Asian shares track Wall St gains on cooler inflation data

    Asian shares track Wall St gains on cooler inflation data

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    BANGKOK — Stocks were mostly higher Wednesday in Asia after a rally on Wall Street spurred by news that inflation in the U.S. cooled more than expected last month.

    The 7.1% consumer price index reading for November raised hopes Tuesday for easing pressure on the economy ahead of an interest rate policy update from the U.S. Federal Reserve.

    The Fed is widely expected to raise its benchmark rate a half-point Wednesday, smaller than the past four hikes of three-quarters of a point.

    Also Wednesday, the Bank of Japan’s quarterly “tankan” survey showed a deterioration in business conditions for major Japanese manufacturers, reflecting higher costs for industrial inputs and energy and weaker demand as the Fed and other central banks raise interest rates to tame inflation.

    The headline index for large manufacturers was 7, down from 8 in the previous quarter and the fourth straight quarter of declines. The tankan measures corporate sentiment by subtracting the number of companies saying business conditions are negative from those responding they are positive.

    Conditions for nonmanufacturers, such as service industries, rose to 19 from 14, as Japan lifted pandemic precautions and reopened to foreign tourists.

    “Today’s Tankan survey suggests that while the services sector is going from strength to strength, the outlook for the manufacturing sector continues to worsen,” Darren Tay of Capital Economics said in a commentary. He noted that capital spending projections also weakened slightly.

    Tokyo’s Nikkei 225 advanced 0.7% to 28,156.21 and the Hang Seng in Hong Kong added 0.6% to 19,722.16. South Korea’s Kospi was up 1.1% to 2,399.25.

    The Shanghai Composite index edged 0.1% lower to 3,172.33.

    In Australia, the S&P/ASX 200 gained 0.7% to 7,251.30. India’s Sensex gained 0.7% while the SET in Bangkok added 0.6%.

    On Tuesday, the S&P 500 rose 0.7% to 4,019.65 and the Nasdaq composite gained 1% to 11,256.81. The Dow Jones Industrial Average picked up 0.3% to 34,108.64.

    Small company stocks also gained ground. The Russell 2000 index rose 0.8% to 1,832.36.

    Stocks pared back gains as analysts cautioned investors not to get carried away by hopes for an easier Fed, as they have in the past.

    The detail of the inflation data “under the hood being less encouraging than it is on the surface,” Mizuho Bank economists said in a report. They noted that core services prices were up 0.4% from a month earlier, distorting inflation risks.

    “To be precise , the headline understates underlying inflation risks that concern the Fed,” the report said.

    Tuesday’s report offered hope that the worst of inflation really did pass during the summer, though inflation remains painfully high and shoppers are paying prices well above levels from a year earlier.

    A Fed rate hike of 0.50 percentage points would usually be a big deal because it’s double the typical move. But with inflation coming off its worst level in generations, it would be a step down from the four hikes of 0.75 percentage points the Fed has approved since the summer.

    Some of Wall Street’s wildest action Tuesday was in the bond market, where yields fell sharply immediately after the inflation report’s release.

    The yield on the 10-year Treasury, which helps set rates for mortgages and other important loans, fell to 3.48% from 3.62% late Monday. The two-year yield, which more closely tracks expectations for the Fed, dropped to 4.22% from 4.39%.

    Other central banks around the world, including the European Central Bank, are also likely to raise their own rates by half a percentage point this week.

    Even if inflation is finally abating, the global economy still is threatened by rate increases already pushed through. The housing industry and other businesses that rely on low interest rates have shown particular weakness, and worries are rising about the strength of corporate profits broadly.

    In other trading, U.S. benchmark crude lost 30 cents to $75.09 per barrel in electronic trading on the New York Mercantile Exchange. It jumped $2.22 on Tuesday to $75.39 per barrel.

    Brent crude, the pricing basis for international trading, shed 34 cents to $80.34 per barrel.

    The dollar slipped to 135.43 Japanese yen from 135.59 yen. The euro rose to $1.0638 from $1.0633.

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