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Jan. 25, 2022, 4:46 p.m. EST

Dow slips from positive territory, U.S. stocks end lower in volatile trade as Fed kicks off policy meeting

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By Christine Idzelis and William Watts

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The central bank began a two-day policy meeting Tuesday, with investors expecting to see officials lay the groundwork for a rate increase in March. The meeting will be closely watched for clues to the pace of further hikes, as well as how soon and quickly the Fed will begin winding down its balance sheet.

“We don’t believe we’re knocking on the door of a recession,” said Emily Roland, co-chief investment strategist at John Hancock Investment Management, in a phone interview Tuesday. But “we do see a potential air pocket in economic growth in the first quarter” as a result of  the omicron variant of the coronavirus, she said.

A survey of consumer confidence fell 1.4 points in January to 113.8, indicating that omicron and high inflation weighed on the minds of Americans early in the new year. Economists polled by The Wall Street Journal had forecast the index to shrink to 111.7 from a revised 115.2 in December.

“Recent price action suggests the long overdue equity market correction has finally begun. In our view, this is a healthy long-term development,” said Steven Ricchiuto, U.S. chief economist at Mizuho Securities, in a Tuesday note.

“We are not calling a bottom to the market but, with the broad market index down a bit over 10%, it is time to begin nibbling at some of the more beaten down areas of the market,” he wrote. “This window of opportunity could stretch until the March 25 rate hike, but that does not mean value has not already been created in the most distressed areas of the market.”

Which companies were in focus?

  • Nvidia Corp. /zigman2/quotes/200467500/composite NVDA +4.27% shares fell 4.5% after a news report indicated that the company is preparing to give up on its planned purchase of Arm Ltd. from SoftBank Group Corp.

  • Shares of 3M Co. /zigman2/quotes/205029460/composite MMM -0.55% rose 0.6% after delivering stronger-than-expected earnings .

  • Johnson & Johnson /zigman2/quotes/201724570/composite JNJ -0.17% shares rose 2.9%, after the consumer goods, pharmaceutical and medical device maker posted weaker-than-expected revenue for the fourth quarter.

  • Shares of General Electric Co. /zigman2/quotes/208495069/composite GE +1.25% dropped about 6%, after the industrial conglomerate reported fourth-quarter free cash flow that topped expectations but saw revenue fall short of forecasts.

  • International Business Machines Corp. /zigman2/quotes/203856914/composite IBM +2.21% late Monday topped earnings and revenue forecasts, but executives declined to provide an earnings outlook. IBM shares climbed 5.6%.

  • American Express Co. /zigman2/quotes/203805826/composite AXP +1.57% shares jumped 8.9% after the company topped revenue and earnings expectations for the fourth quarter, citing record levels of spending through its cards .

  • Shares of Raytheon Technologies Corp. /zigman2/quotes/203237915/composite RTX +0.40% rose 2.5% after the aerospace and defense company reported fourth-quarter profit that beat expectations but revenue that missed, and provided a downbeat full-year outlook .

  • Lockheed Martin Corp. /zigman2/quotes/200691238/composite LMT -0.79% shares climbed 3.7% after the aerospace and defense company reported fourth-quarter profit and sales that ros e above expectations , with growth in aeronautics, missiles and fire control and rotary and mission systems sales offset a decline in space sales.

How did other assets fare?

  • The yield on the 10-year Treasury note /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +2.05% rose 4.9 basis points to 1.784%. Yields and debt prices move opposite each other.

  • The ICE U.S. Dollar Index /zigman2/quotes/210598269/delayed DXY -0.0084% , a measure of the currency against a basket of six major rivals, was up around 0.1%.

  • Oil futures /zigman2/quotes/211629951/delayed CL.1 +5.88% rose, with West Texas Intermediate crude for March delivery rising nearly 2.8% to settle at $85.60 a barrel. Gold futures /zigman2/quotes/210034565/delayed GC00 +0.17% rose 0.6%, settling at $1,852.50 an ounce, the highest in two months.

  • The Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP +1.88% rose 0.7%, while London’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +1.14% gained 1%.

  • The Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP +0.27% fell 2.6%, while the Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +0.26% shed 1.7% in Hong Kong and Japan’s Nikkei 225 /zigman2/quotes/210597971/delayed JP:NIK +1.47% declined 1.7%.

–Mike Murphy contributed to this article.

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July 7, 2022 3:15p
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