By Sinéad Carew and Tom Wilson
NEW YORK/LONDON (Reuters) – The S&P 500 closed lower on Tuesday as investors awaited guidance on the Federal Reserve’s path of interest rate hikes, while U.S. oil futures gained on hopes China loosens COVID-19 restrictions that have fueled fears about the global economy.
The U.S. dollar edged lower against the Japanese yen while the Aussie dollar jumped as sentiment improved on hopes China would ease on lockdowns after health officials discussed speeding up COVID vaccinations for elderly people.
U.S. Treasury yields rose ahead of a public appearance by Fed Chair Jerome Powell and a slew of data due later in the week. A survey released on Tuesday showed U.S. consumer confidence eased further in November amid persistent worries about the rising cost of living.
Richmond Fed 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.
And after similar messages from other Fed officials on Monday, investors were warily awaiting Powell’s comments at a Brookings Institution event on Wednesday about the outlook for the U.S. economy and the labor market. Earlier this month Powell had dashed hopes of policy easing after a Fed meeting.
“No one is willing to buy ahead of tomorrow with Powell speaking. Everyone is nervous about what he is going to say,” said Ron Saba, senior portfolio manager at Horizon Investments in Charlotte.
However, Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia said earlier that 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.”
While the Dow Jones Industrial Average rose 3.07 points, or 0.01%, to close at 33,852.53, the S&P 500 lost 6.31 points, or 0.16%, to end at 3,957.63.
The Nasdaq Composite dropped 65.72 points, or 0.59%, to 10,983.78 with pressure from tech sector heavyweight Apple, which manufactures its iPhones in China and has been impacted by COVID-related protests there.
MSCI’s gauge of stocks across the globe gained 0.01%.
U.S. Treasury yields rose in choppy trading as investors waited for upcoming data including third-quarter U.S. gross domestic product, Chicago manufacturing numbers, factory activity based on the Institute for Supply Management and non-farm payrolls for November due out Friday.
Benchmark 10-year note yields were up 5 basis points at 3.752% from 3.702% late on Monday. The 30-year bond yield was last up 5.6 basis points at 3.8049%.
“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.
In currencies the dollar index rose 0.188%, with the euro down 0.11% to $1.0326.
The Japanese yen strengthened 0.19% versus the greenback at 138.68 per dollar, while Sterling was last trading at $1.1946, down 0.10% on the day.
The Aussie was last up 0.54% 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 worries, but concerns that OPEC+ would keep its output unchanged at its upcoming meeting limited gains.
Five OPEC+ sources said OPEC+ is likely to keep oil output policy unchanged at its Sunday meeting, while two sources said an additional production cut was also likely to be considered. Neither, however, thought another cut was highly likely.
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 $1,749.39 an ounce. U.S. gold futures gained 0.45% to $1,748.10 an ounce.
(Reporting by Sinéad Carew, Gertrude Chavez-Dreyfuss in New York, Noel Randewich in San Francisco, Tom Wilson in London and Wayne Cole in Sydney; Editing by Lisa Shumaker, Chizu Nomiyama and Chris Reese)