Stocks open lower on Wall Street, continuing a weak patch

NEW YORK (AP), Stocks open lower on Wall Street, while bond yields rise globally. The Bank of Japan shocked investors by raising the yield limit on Japanese government bonds. This was a rate rise, sending markets in Japan and Asia lower, and the yen sharply rising against the dollar. The yields on Treasurys in the United States rose sharply.
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In the early hours of Tuesday, the S&P 500 dropped 0.4% and the Nasdaq composite fell 0.7%. The Dow Jones Industrial Average fell 0.2%. THIS IS BREAKING NEWS!
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Below is an earlier story by AP. U.S. futures traded between small gains or losses on Tuesday morning after the Bank of Japan shocked investors overnight by increasing caps on its 10-year bond yield
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Although the Bank of Japan didn't mention inflation in its policy statement it stated that the shift was intended to improve market functioning and encourage smoother formation of all yield curves while maintaining accommodative fiscal conditions. Analysts understood that the statement was an acknowledgment by the normally dovish Japanese that fighting inflation is now a priority. In a note to clients, Jennifer Lee from BMO Economics stated that the surprise move by the BoJ allowed it to make a small shift away from the extreme dovish end of the monetary policy spectrum. This was where it had been standing alone for the past year among major central bankers. It is not joining rate-hikers, but it is getting closer. Futures for Dow Jones industrials were essentially flat, while futures for S&P 500 fell 0.2%
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Globally, bond yields increased while stocks fell and the Japanese currency strengthened against the U.S. Dollar. The Bank of Japan stated that the yield curve for the Japanese Government Bond would be allowed to fluctuate between 50 and 0%, an increase from its previous limit of 25 basis points.
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Tuesday's policy shift will allow market interest rate to edge higher. Japan was a major industrialized country that had refused to allow yields rise. The U.S. and Europe have central banks.
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To combat inflation, they have increased rates aggressively. After a prolonged period of economic malaise, stagnant inflation, the central bank introduced previous caps to control its yield curve in September 2016. After the announcement of the policy change, Tokyo's Nikkei225 plunged 2.5% to 26,568.03.
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After the World Bank reduced its projection of China's economic growth to 2.7%, from 4.3% in June, the Shanghai Composite Index fell 1.1% to 3,073.76. According to the bank, repeated city shutdowns were necessary to combat COVID-19 epidemics. The Hang Seng in Hong Kong fell 1.3% to 19,094.80, while the Kospi in Seoul dropped 0.8% to 2,333.29
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The S&P-ASX 200 in Sydney fell 1.5% to 7,024.03, while the Sensex in India gained 0.8% to 61.806.19. New Zealand and Southeast Asian markets declined. Midday trading in Europe saw the FTSE in London rise 0.1%, while the DAX and CAC 40 in Paris fell 0.3% each after having fallen more than 1% earlier.
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The central banks around the globe continue to increase interest rates, causing markets to be beaten back over the past weeks and for the majority of the year. Anderson Alves, of ActivTrades, stated in a report that "the tone in markets reflects a cloudy view for the global economy." The S&P 500 plunged 0.9% Monday as technology stocks, retailers, and communications companies receded.
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After the Fed last week said that rates may need to remain higher than originally forecast, the index is now sliding. The index is currently down 20% for the year, with just two weeks remaining in 2022. The Dow Jones Industrial Average dropped 0.5%
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The Nasdaq composite lost 1.5%. In its seventh increase of the year, the Fed increased its short-term lending rates by one-half percent last week. This has scuttled investor hopes in the U.S.
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Data showing economic activity cooling might prompt the central bank to ease off its rate hike plans. Federal funds rates are at an all-time high of between 4.25% and 4.5%, which is a 15 year record. It is expected that the Fed will increase its range to 5% to 5.255% by 2023.
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The forecast doesn’t recommend a reduction in inflation before 2024. Investors will be looking forward to U.S. economic data this week for updates on the trajectory of inflation
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Although it has fallen from 9.1% in June, it was still 7.1% in November. On Wednesday, the National Association of Realtors reported November home sales. The Conference Board also releases Wednesday's consumer confidence report for December.
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Friday will see the U.S. government report November consumer spending. The Fed will be monitoring the report as an indicator of inflation.
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The benchmark U.S. crude oil gained 77c to $75.96 per barrel in electronic trading on New York Mercantile Exchange. Brent crude oil, which is the price basis for international oil trade, rose 47c to $80.27 per barrel in London
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From Monday's 136.99yen, the dollar fell to 132.47yen. From $1.0604, the euro rose to $1.0613. --- McDonald's reported from Beijing, Ott from Washington.