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Tesla slips as U.S. regulator opens probe into Model Y cars
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Occidental rises as Buffett's Berkshire boosts stake to 22.2%
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Private payrolls stronger than expected in February
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Indexes: Dow slips 0.02%, S&P off 0.04%, Nasdaq up 0.05%
(Updates to market open)
By Sruthi Shankar and Bansari Mayur Kamdar
March 8 (Reuters) - U.S. stock indexes struggled for
direction on Wednesday as investors worried about a potential
recession, a day after comments from Federal Reserve Chair
Jerome Powell fueled bets of sharper rate hikes.
Ahead of the crucial nonfarm payrolls report on Friday, data
showed U.S. private payrolls increased more than expected in
February, pointing to continued labor market strength.
Powell told U.S. lawmakers on Tuesday the Fed would likely
need to raise interest rates more than expected as it seeks to
tame inflation, sending key U.S. stock indexes down more than
1%, with the benchmark S&P 500 logging its biggest
percentage decline in two weeks.
Traders sharply increased their bets that the U.S. central
bank will raise rates by 50 basis points later this month, with
money market futures pricing in a nearly 70% chance of such a
move. Powell will testify again before the House Financial
Services Committee at 10:00 a.m. ET.
A closely watched part of the U.S. Treasury yield curve saw its deepest inversion in more than 40 years on Tuesday. Such an inversion is seen as a reliable recession indicator. "The yield on the two-year is really showing you that the Treasury curve is taking the Fed seriously about where interest rates are heading, whereas the 10-year is really trying to get behind that hard landing narrative," said Art Hogan, chief market strategist at B Riley Wealth. "Unless we get some data over the course of the next two weeks, we really don't know which way we should be landing. Unfortunately the most important piece of the data doesn't come until Friday, that's why we've got a market that's meandering a bit." BlackRock's chief investment officer of global fixed income, Rick Rieder, said the Fed could raise rates to 6% and keep them there for an extended period of time to fight inflation. Traders currently see the Fed funds rate peaking at 5.66% by September. Labor department data at 10:00 a.m. ET is likely to show U.S. job openings increased to 10.5 million in January after an unexpected rise to 11 million in the previous month. At 9:38 a.m. ET, the Dow Jones Industrial Average was down 7.11 points, or 0.02%, at 32,849.35, the S&P 500 was down 1.51 points, or 0.04%, at 3,984.86, and the Nasdaq Composite was up 5.46 points, or 0.05%, at 11,535.80. Tesla Inc slid 2.6% after U.S. auto safety regulator said it was opening a preliminary investigation into 120,000 Model Y 2023 vehicles following reports about steering wheels falling off while driving. Occidental Petroleum Corp gained 3.4% after Warren Buffett's Berkshire Hathaway Inc increased its stake in the oil company to about 22.2%. Declining issues outnumbered advancers for a 1.11-to-1 ratio on the NYSE and 1.38-to-1 ratio on the Nasdaq. The S&P index recorded no new 52-week high and eight new lows, while the Nasdaq recorded 11 new highs and 57 new lows. (Reporting by Sruthi Shankar and Bansari Mayur Kamdar in Bengaluru, additional reporting by Amruta Khandekar Editing by Vinay Dwivedi)
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