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Wall Street subdued, gold slides ahead of CPI, Fed

by Jessica Weisman-Pitts
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Wall Street subdued, gold slides ahead of CPI, Fed

By Stephen Culp

NEW YORK (Reuters) -U.S. stocks were muted and gold slid on Wednesday, as investors bided their time ahead of crucial inflation data and the U.S. Federal Reserve’s monetary policy meeting.

The three major U.S. stock indexes were mixed, with the Dow Jones edging higher and the Nasdaq nominally lower and the S&P 500 essentially unchanged.

Gold dropped to a near three-week low as the dollar firmed and Treasury yields moved higher.

On Tuesday, the Labor Department is expected to release its closely watched Consumer Price Index (CPI) report, which is expected to show inflation continues to cool but remains well above the Fed’s 2% annual target.

“This is typical market action prior to big releases,” said Jay Hatfield, portfolio manager at InfraCap in New York. “There’s considerable uncertainty CPI, to a lesser to degree PPI and the Fed.”

Also on Tuesday, the Federal Open Markets Committee (FOMC) is due to convene for its two-day monetary policy meeting, which will culminate on Wednesday with its interest rate decision and the release of its summary economic projections.

“When something big is about to happen, usually nobody makes any big bats either direction, and that’s what’s happening today,” Hatfield added.

While the Fed is largely expected to let the Fed funds target rate stand at 5.25%-5.50%, market participants will parse the central bank’s dot plot in order to assess the central bank’s expected path forward.

The Dow Jones Industrial Average rose 63.43 points, or 0.17%, to 36,311.3, the S&P 500 gained 2.43 points, or 0.05%, to 4,606.8 and the Nasdaq Composite dropped 34.64 points, or 0.24%, to 14,369.34.

European shares were slightly higher as market participants stood pat in advance of critical U.S. economic data and interest rate decisions from the Fed and other major central banks.

The pan-European STOXX 600 index rose 0.29% and MSCI’s gauge of stocks across the globe gained 0.04%.

Emerging market stocks lost 0.24%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.29% lower, while Japan’s Nikkei rose 1.50%.

U.S. Treasury yields extended last week’s rise as investors prepped for two auctions as well as the Fed’s policy meeting, which could determine whether a monetary policy shift is on the horizon.

Benchmark 10-year notes last fell 7/32 in price to yield 4.2698%, from 4.245% late on Friday.

The 30-year bond last fell 15/32 in price to yield 4.3526%, from 4.326% late on Friday.

The greenback edged higher against a basket of world currencies ahead of Tuesday’s CPI report, while the yen slid amid fading hopes for a Bank of Japan pivot in December.

The dollar index rose 0.16%, with the euro down 0.16% to $1.0744.

The Japanese yen weakened 1.01% versus the greenback at 146.41 per dollar, while Sterling was last trading at $1.2557, up 0.09% on the day.

Oil prices were slightly higher as investors balanced concerns over OPEC+ production cuts against worries of softening demand in the coming year.

U.S. crude fell 0.11% to $71.15 per barrel and Brent was last at $75.82, down 0.03% on the day.

Gold slid to a near three-week low as the dollar firmed in advance of Tuesday’s CPI report.

Spot gold dropped 1.0% to $1,982.49 an ounce.

(Reporting by Stephen Culp; Additional reporting by Wayne Cole and Lawrence White; Editing by Sharon Singleton)