US Stocks Close Lower as Fed Begins Two-Day Policy Meeting

Last Updated: Tuesday, January 25, 2022 4:40 PM | MT Newswires

US stocks closed lower in another volatile session, as the Federal Reserve began its two-day policy meeting.

The S&P 500 fell 1.2% to 4,356.45, the Nasdaq Composite sank 2.3% to 13,539.30, while the Dow Jones Industrial Average was down 0.2% to 34,297.73, swinging between red and green territory in the last hour of regular session trade.

Technology and consumer services were among the worst performers, with energy and financials the only sectors that saw gains.

West Texas Intermediate crude oil rose 2.3% to $85.19 a barrel.

The 10-year US Treasury yield climbed 4.6 basis points to 1.78%.

After a meeting ending Wednesday, the Federal Open Market Committee is set to signal an increase in interest rates as soon as March. Fed fund futures now imply a nearly 85% chance of a 25 basis points increase in the fed funds rate in March, compared with about 54% a month ago, according to the CME Group's Fed Watch tool.

Meanwhile, the US placed 8,500 troops on alert for possible deployment to Eastern Europe as Russia continued to mass troops on Ukraine's borders, according to media reports.

In other economic news, the Conference Board's Consumer Confidence Index fell to 113.8 in January from 115.2 in December due to a decline in expectations that was partially offset by an increase in the assessment of current conditions.

The share of respondents saying jobs are currently "plentiful" decreased, but so did those indicating jobs were "hard to get." The six-month outlook for employment was less optimistic. The view of near-term business conditions improved, while the outlook deteriorated.

The FHFA home price index posted a 1.1% gain in November after a 1.1% increase in October. The index was 17.5% higher than a year ago, but it appears that home price acceleration has begun to peak according to the FHFA.

Released at the same time, S&P Case-Shiller reported a 0.9% November home price gain after a 0.8% increase in October. The index was up 18.8% year-over-year, slower than the 19% gain in the previous month.

In company news, IBM's (IBM) sales and earnings beat expectations as demand for technology and consulting resulted in more than $1 billion of additional revenue in the fourth quarter, setting the software giant on course to meet its medium-term targets. Shares of the company jumped 5.7%, the second-biggest gainer on the Dow.

IBM is seeing a clear acceleration in hybrid cloud spending and is a barometer for the ramp in cloud spending already underway for 2022, Wedbush analyst Daniel Ives said in a research note ahead of Microsoft's (MSFT) fiscal Q2 earnings after the bell on Tuesday. "We view this [Q4] as the most important earnings season for the tech space in potentially the last decade, as the Street now needs to hear good news at a "white knuckle time" from tech bellwethers with fundamentals now in focus," Ives said.

American Express (AXP) raised its earnings outlook on expectations for higher revenue in 2022 after reporting fourth-quarter results for 2021 that topped Wall Street's expectations. Shares surged 8.9%, the top performer on the S&P 500 and the Dow.

General Electric's (GE) fourth-quarter revenue missed Wall Street's estimates and its 2022 adjusted earnings outlook also fell short of consensus views. Shares slumped 6%, the biggest decliner on the S&P 500.

Gold was up 0.3% to $1,850.40, silver was up 0.3% to $23.88 an ounce, and copper was up 1.1% to $4.46 per pound. Among energy ETFs, the United States Oil Fund was up 1.4% to $60.97, and the United States Natural Gas Fund was up 1.9% to $13.57.

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