U.S. stocks are climbing Wednesday afternoon as traders wait for the Federal Reserve wraps up its last meeting of the year. Investors expect the Fed to raise interest rates again, and are looking for details about its plans for 2019 amid signs the global economy is slowing down.
A partial recovery in oil prices is pulling energy companies higher following huge losses a day earlier. Other companies that are tightly linked to the economy and do better in times of faster growth are also rising. Those include banks, retailers, and technology and industrial companies.
KEEPING SCORE: The S&P 500 index rose 21 points, or 0.8 percent, to 2,567 as of 1:30 p.m. Eastern time. It’s down 7 percent in December. The Dow Jones Industrial Average added 213 points, or 0.9 percent, to 23,888. The Nasdaq composite gained 42 points, or 0.6 percent, to 6,826. The Russell 2000 index, made up of smaller-company stocks, picked up 10 points, or 0.8 percent, to 1,387.
FED FOCUS: The Fed will likely raise its short-term interest rate another quarter-point, to a range of 2.25 percent to 2.5 percent. The central bank has forecast three more hikes in 2019, but with investors worried about slowing economic growth and the financial markets slumping, experts expect the Fed to predict a slower path of increases next year. For stock markets, battered recently by a series of concerns related to mounting trade tensions between the U.S. and China, that could be cause for optimism.
The Fed’s moves help set lending rates around the U.S., and higher rates tend to slow down economic growth because they make it more expensive for businesses and consumers to borrow money. Other major central banks are either reducing their economic stimulus plans or raising rates. The global economy is already forecast to slow down in 2019 and investors are getting nervous rising rates will make that worse.
FROWNY FACE: Facebook fell after the New York Times reported that the social media network gave companies more access to users’ personal data than it has previously said. The report said Facebook had arrangements with more than 150 companies including Microsoft, Amazon, Spotify and Netflix that let different companies read, write and delete users’ private messages, see the names of a user’s friends or their news feeds without their consent.
Separately, the District of Columbia sued Facebook for allowing Cambridge Analytica, a data-mining firm working for the Trump campaign, to improperly access data from as many as 87 million Facebook users.
Facebook lost 6.2 percent to $134.65. It’s down 38 percent since late July on concerns about a slowdown in user growth, multiple privacy and safety scandals, as well as the possibility of increased regulation in the future.
LOST IN THE MAIL: FedEx said international shipping, especially in Europe, fell in its latest quarter, while the U.S.-China trade dispute is also affecting its business. The shipping company posted a smaller profit than analysts expected and said it will cut spending and offer buyouts to some workers to help make up for the shaky results.
“The peak for global economic growth now appears to be behind us,” Chief Marketing Officer Rajesh Subramanian said in a conference call with investors. The company also said
FedEx stock lost 8.8 percent to $167.65, and it has dropped 32 percent this year.
BONDS: Bond prices edged higher. The yield on the 2-year Treasury note fell to 2.65 percent from 2.66 percent, and the yield on the 10-year note fell to 2.81 percent from 2.82 percent.
Lagging the market were companies including utilities and household goods makers. Those companies pay large dividends, similar to bonds, and they generally do well when rates are lower.
ENERGY: Oil prices turned higher after plunging on worries about rising supplies and weakening global growth, which could weigh on demand. Benchmark U.S. crude climbed 1.7percent to $47.03 a barrel in New York. It dropped 7 percent Tuesday and closed at a 16-month low, and has fallen almost 40 percent since Oct. 3. Brent crude, used to price international oils, was up 1.3 percent to $56.97 a barrel in London.
Wednesday’s recovery helped energy company stocks, which are trading at their lowest levels since early 2016.
MEDICINE CABINET MERGER: Drugmakers GlaxoSmithKline and Pfizer said they will combine their consumer product businesses, bringing Pfizer’s Advil pain medicine and Centrum supplements together with Glaxo’s Sensodyne toothpaste. GlaxoSmithKline of Britain will own two-thirds of the combined company. Its stock gained 2.6 percent to $38.07 while Pfizer edged up 0.6 percent to $42.66.
EUROPE: European stocks rose after Italy’s government reached an agreement with the European Commission on its budget plans. That avoids a legal dispute over the government’s plan to ramp up spending. The Italian FTSE MIB jumped 1.6 percent. Britain’s FTSE 100 rose 1 percent while Germany’s DAX added 0.2 percent and the CAC 40 in France rose 0.5 percent.
ASIA: Japan’s Nikkei 225 index fell 0.6 percent and while South Korea’s Kospi rose 0.8 percent. Hong Kong’s Hang Seng was 0.2 percent higher.
CURRENCIES: The dollar slipped to 112.21 yen from 112.53 yen. The euro rose to $1.1425 from $1.1357 and the British pound rose to $1.2652 from $1.2639.
AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP