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Stocks mixed, yields ease; investors weigh chance of rate hike slowdown

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  • US stocks fall in early trading; European stocks jump
  • Dollar index near flat
  • Treasury yield dip

NEW YORK, Nov 1 (Reuters) – Global stocks were mixed on Tuesday, with Wall Street falling and European shares gaining, while Treasury yields dipped as investors speculated whether the US Federal Reserve may hint at a slower pace of tightening this week.

Still, investors were also digesting Tuesday’s data showing US job openings unexpectedly rose in September, suggesting that demand for labor remains strong despite the Fed’s recent rate hikes.

The Fed is expected to raise interest rates by 75 basis points on Wednesday, but investors will look for any signals the Fed may be considering slowing the pace of rate hikes in the future.

“Markets are hoping (Fed Chair) Jerome Powell will step into his Santa costume early, signaling a slower and more gradual pace of rate hikes in the months ahead,” said Karl Schamotta, chief market strategist, at Corpay in Toronto.

Although last week’s ECB meeting was perceived by markets as containing dovish signals, ECB President Christine Lagarde said in an interview on Tuesday that the central bank must keep raising interest rates to fight off inflation, even if the probability of a euro zone recession has increased.

The Bank of England (BoE) is also meeting this week and expected to deliver a 75-bps increase as well. Traders then expect the BoE to slow down and raise rates by 50 bps in December.

The S&P 500 was last down 0.7% in choppy trading, with the index cutting early gains after economic data. read more

The Dow Jones Industrial Average (.DJI) fell 225.75 points, or 0.69%, to 32,507.2, the S&P 500 (.SPX) lost 25.51 points, or 0.66%, to 3,846.47 and the Nasdaq Composite (.IXIC) dropped 77.98 points, or 0.71%, to 10,910.17.

The pan-European STOXX 600 index (.STOXX) rose 0.50% and MSCI’s gauge of stocks across the globe (.MIWD00000PUS) gained 0.07%.

British energy giant BP (BP.L) made $8.15 billion in third quarter profit, more than double what it made in the same period last year. Rivals Shell (SHEL.L), Exxon Mobil (XOM.N) and TotalEnergies (TTEF.PA) also reported bumper profits last week.

The yield on 10-year notes fell 5 basis points to 4.027%, while the two-year yield, which typically moves in step with rate expectations, was unchanged at 4.501%. The two-year yield briefly turned positive.

In the currency market, the dollar index, which measures the US currency against six rivals, was last little changed.

The Chinese yuan fell to a near 15-year low against the dollar, before paring its losses after the central bank fixed the official guidance rate on the weaker side of the key 7.2 per dollar level for the first time since 2008. The dollar was last down 0.5% against the offshore yuan at 7.2979.

The Australian dollar was little changed at US$0.64. . The Reserve Bank of Australia raised rates by 25 bps for a second month running, but revised up its inflation outlook and said more rate hikes would be needed.

US crude recently rose 2.09% to $88.34 per barrel and Brent was at $94.59, up 1.92% on the day.

Additional reporting by Gertrude Chavez-Dreyfuss in New York and Elizabeth Howcroft in London, Editing by Ed Osmond, Chizu Nomiyama and Tomasz Janowski

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