Stocks Open Mixed Ahead of Fed Meeting

U.S. stock indexes were mixed at the opening Tuesday as investors geared up for the Federal Reserve’s policy decision and a batch of earnings.

The S&P 500 rose less than 0.1%. The benchmark stocks gauge rose 0.6% Monday, its third gain in four trading days. The technology-focused Nasdaq Composite slipped 0.3% while the Dow Jones Industrial Average rose 0.2%.

Ahead of the bell, Pfizer fell 1.2% after forecasting lower revenue than predicted by analysts. Investment firm KKR fell 1.8% after swinging to a loss.

Estee Lauder

lost 9.3% premarket after the company lowered its revenue and earnings outlook.

Elliott Investment Management disclosed a roughly 6% stake in Western Digital, pushing shares of the data-storage company up 10%.

Rockwell Automation

ROK -14.05%

said quarterly earnings tumbled, sending shares down 8.4%.

The yield on 10-year Treasury notes topped 3% for a second straight day before slipping back to 2.957%, compared with 2.995% Monday. Yields, which move inversely to bond prices and are a reference for borrowing costs throughout the economy, have shot to their highest levels since 2018 in anticipation of higher interest rates.

They have also dragged up government borrowing costs globally. The yield on 10-year German government bonds, the benchmark in Europe, surpassed 1% Tuesday for the first time since 2015, before slipping back to 0.935%.

Overseas stock markets wavered. The Stoxx Europe 600 gained about 0.3%, led by shares of banks and oil-and-gas companies on a busy day for earnings in the region.

BP shares rose 3.1% after the oil producer reported underlying profit of $6.2 billion, when stripping out a pretax accounting charge related to its decision to exit its Russia holdings.

BNP Paribas

posted a jump in earnings, sending shares of the French lender 4.3% higher.

Sweden’s OMX Stockholm All-Share steadied, edging up 0.1%. On Monday, the market was among the worst affected by a flash crash in European shares sparked by an erroneous sale by

Citigroup.

Mainland Chinese markets were closed for a public holiday. Hong Kong’s Hang Seng edged up 0.1%.

All eyes are on the Federal Reserve’s next steps.



Photo:

BRENDAN MCDERMID/REUTERS

All eyes are on the Fed’s next steps as the central bank tries to tap the brakes on the fastest pace of inflation in decades. Rising rates have combined with coronavirus shutdowns in China and the war in Ukraine to send jitters through stock markets this year.

Rate-setting officials will gather Tuesday for a two-day policy meeting. At its conclusion Wednesday, the Fed is expected to raise interest rates by a half percentage point, the first such increase in 22 years and following on from a quarter-point rise in March.

Investors will also seek details from Chairman

Jerome Powell

on the central bank’s plans to reduce its bond holdings. Officials have recently indicated that they will allow $95 billion in securities to mature every month, unwinding another form of stimulus lavished on markets during the pandemic.

“It appears that the war in Ukraine hasn’t derailed the Fed in the slightest,” said

Gregory Perdon,

co-chief investment officer at

Arbuthnot Latham.

Financial conditions have already tightened significantly, Mr. Perdon added, pointing to a strengthening dollar, the increase in Treasury yields and rising mortgage rates.

Earnings season continues apace.

Airbnb,

ABNB -2.79%

Starbucks,

Lyft

and

American International Group

are on the block after markets close.

Broadly positive corporate reports have failed to steady the market in recent weeks. Earnings growth is in line with historical norms at about 11% annually, according to Deutsche Bank analysts, while margins have remained near record levels in spite of rising input prices.

In commodities, Brent-crude futures prices slipped 1% to $106.55 a barrel. Traders are awaiting a meeting of ministers from OPEC members and their allies including Russia on Thursday, and also monitoring shutdowns in China that are curbing fuel demand.

A European Union proposal to ban Russian crude oil by the end of the year is due to be circulated to member states Tuesday.

Federal Reserve Chairman Jerome Powell has indicated that the central bank is likely to raise interest rates by a half percentage point at its meeting. Photo: Samuel Corum/Getty Images

Write to Joe Wallace at joe.wallace@wsj.com

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