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U.S. Stocks Little Changed Ahead Of Next Week's Fed Meeting

wallstreet aug20 09dec22 lt

After an initial move to the downside, stocks have shown a lack of direction over the course of morning trading on Friday. The major averages have been bouncing back and forth across the unchanged following the rebound seen in the previous session.

Currently, the major averages are narrowly mixed. While the Dow is down 33.30 points or 0.1 percent at 33,748.18, the S&P 500 is up 0.93 points or less than a tenth of a percent at 3,964.44 and the Nasdaq is up 12.08 points or 0.1 percent at 11,094.09.

The lackluster performance on Wall Street comes as traders seem reluctant to make significant moves ahead of next week's Federal Reserve meeting.

While the Fed is widely expected to slow the pace of interest rate hikes to 50 basis points, traders have recently expressed concerns about how much further the Fed will need to raise rates in order to contain inflation.

Traders are likely to pay close attention to the Fed's accompanying statement, although a lot of key data will be released before the next meeting in late January/early February.

Adding to concerns about the outlook for interest rates, the Labor Department released a report showing U.S producer prices increased by more than expected in the month of November.

The Labor Department said its producer price index for final demand rose by 0.3 percent in November, matching upwardly revised increases in October and September.

Economists had expected producer prices to inch up by 0.1 percent compared to the 0.2 percent uptick originally reported for the previous month.

However, the negative sentiment was largely offset by a report from the University of Michigan showing a decrease in consumers' inflation expectations.

The report showed one-year inflation expectations fell to a fifteen-month low of 4.6 percent in December from 4.9 percent in November, although five-year inflation expectations held at 3.0 percent.

"Declines in short-run inflation expectations were visible across the distribution of age, income, education, as well as political party identification," said Surveys of Consumers Director Joanne Hsu.

Most of the major sectors are showing only modest moves on the day, contributing to the lackluster performance by the broader markets.

Energy stocks have shown a notable move to the downside, however, with the Philadelphia Oil Service Index and the NYSE Arca Oil Index falling by 1.4 percent and 1.0 percent, respectively.

The weakness among energy stocks comes despite an increase by the price of crude oil, as crude for January delivery is climbing $0.82 to $72.28 a barrel.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index surged by 1.2 percent, while Hong Kong's Hang Seng Index spiked by 2.3 percent.

The major European markets have also moved to the upside on the day. While the German DAX Index has risen by 0.5 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index are both up by 0.1 percent.

In the bond market, treasuries are extending the notable pullback seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 6.4 basis points at 3.555 percent.

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