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Stocks dip while U.S. crude gains on China hopes

Wall Street lost ground on Tuesday as investors awaited guidance on the Federal Reserve’s interest rate hiking path, while U.S. oil futures settled higher on hopes that China would loosen COVID-19 restrictions that had fueled fears about the global economy.

November 30, 2022
By Sinéad Carew and Tom Wilson
30 November 2022

By Sinéad Carew and Tom Wilson

NEW YORK/LONDON, Nov 29 (Reuters) –

Wall Street lost ground on Tuesday as investors awaited
guidance on the Federal Reserve’s interest rate hiking path,
while U.S. oil futures settled higher on hopes that China would
loosen COVID-19 restrictions that had fueled fears about the
global economy.

The Australian dollar bounced back on Tuesday as investors
hoped China would ease COVID restrictions after Chinese health
officials discussed speeding up COVID vaccinations for elderly
people. The yen strengthened against the dollar, and the euro
lost ground.

U.S. Treasury trading was choppy ahead of a slew of data due
later in the week and after a survey released on Tuesday showed
that U.S. consumer confidence eased further in November amid
persistent worries about the rising cost of living.

Richmond Federal Reserve Bank President Thomas Barkin on
Monday doused speculation the U.S. central bank would reverse
course on interest rates relatively quickly next year in
comments made late on Monday.

After similar messages from other Fed officials on Monday,
investors were warily awaiting Wednesday’s appearance by Fed
Chair Jerome Powell, who earlier this month had dashed hopes of
policy easing when he spoke to reporters after a Fed meeting.

“Investors rare hedging against what could be a hawkish
reiteration of his press conference comment. That could cast
some cold water over recent market rallies,” said Mark Luschini,
chief investment strategist at Janney Montgomery Scott in
Philadelphia.

However, weakening consumer confidence may have marginally
helped to soften Treasury yields, weaken the dollar and boost
stocks as investors viewed it as “ammunition for the Fed to
soften its hawkish impulse,” the strategist added.

The Dow Jones Industrial Average fell 50.35 points,
or 0.15%, to 33,799.11, the S&P 500 lost 12.5 points, or
0.32%, to 3,951.44 and the Nasdaq Composite dropped
79.10 points, or 0.72%, to 10,970.40.

The pan-European STOXX 600 index closed down 0.13%
while MSCI’s gauge of stocks across the globe
shed 0.09%.

U.S. Treasury yields rose in choppy trading as investors
waited for upcoming data including third-quarter U.S. data on
gross domestic product (GDP), Chicago manufacturing numbers,
factory activity based on the Institute for Supply Management
and non-farm payrolls for November due out Friday.

Benchmark 10-year notes were up 4.4 basis points
to 3.746%, from 3.702% late on Monday. The 30-year bond
was last up 5.4 basis points to yield 3.8032%, from
3.749%. The 2-year note was last was up 0.2 basis
points to yield 4.4732%, from 4.471%.

“It’s going to be a busy second half of the week with
all the data points we’re expecting. But the main focus will be
on inflation and jobs,” said Subadra Rajappa, head of U.S. rates
strategy, at Societe Generale in New York.

The dollar index rose 0.188%, with the euro
down 0.12% to $1.0325.

The Japanese yen strengthened 0.22% versus the greenback
at 138.63 per dollar, while sterling was last trading at
$1.1951, down 0.06% on the day.

The Aussie was last up 0.53% against the dollar
after earlier rising as much as 1.4%.

Oil prices climbed on hopes for a relaxation of China’s
strict COVID-19 controls, which had fueled demand concerns.

U.S. crude futures settled up 1.24% at $78.20 per
barrel while Brent finished at $83.03, down 0.2%.

Gold prices rose with help from the dollar’s retreat and
hopes for less aggressive U.S. rate hikes going forward.

Spot gold added 0.5% to $1,750.10 an ounce. U.S. gold
futures gained 0.50% to $1,749.00 an ounce.

(Reporting by Sinéad Carew, Gertrude Chavez-Dreyfuss in New
York, Tom Wilson in London and Wayne Cole in Sydney; Editing by
Susan Fenton, Lisa Shumaker and Chizu Nomiyama)

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