US stocks slip ahead of Fed announcement on interest rates and crude oil prices rise again

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NEW YORK (AP) — The U.S. stock market is slipping as the countdown ticks to an afternoon announcement from the Federal Reserve on what it will do with interest rates. Oil prices continued to march higher early Wednesday, meanwhile, because of the war with Iran. The S&P 500 edged 0.2% lower, a day after falling from its latest all-time high. The Dow Jones Industrial Average lost 127 points, or 0.3%. and the Nasdaq composite fell 0.5%. Booking Holdings fell 2.5% after saying the war with Iran is affecting its results. Amazon, Alphabet, Meta Platforms and Microsoft report their latest results after the closing bell.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

HONG KONG (AP) — World shares were mixed on Wednesday following losses on Wall Street, while oil prices gained more than 3% on uncertainties over when the war in Iran will end.

The futures for the S&P 500 and the Dow Jones Industrial Average edged less than 0.1% higher.

The Federal Reserve was expected to keep its key interest rate unchanged at 3.6% as it wraps up a policy meeting later Wednesday. Most policymakers believe at that level, the rate can still cool inflation by slowing borrowing and spending, but not so much that it will drag down hiring or raise unemployment.

In early European trading, Britain's FTSE 100 slipped 0.6% to 10,269.06. Germany's DAX traded 0.3% lower at 23,958.39, while France's CAC 40 dropped 0.6% to 8,054.38.

Markets in Japan were closed for a holiday.

Elsewhere in Asia, South Korea’s Kospi rose 0.8% to 6,690.90 and the Hang Seng in Hong Kong gained 1.7% to 26,111.84. The Shanghai Composite index rose 0.7% to 4,107.51.

Australia’s S&P/ASX 200 slipped 0.3% to 8,687.00.

Taiwan’s Taiex lost 0.6%, and India's Sensex gained 0.9%.

The price of a barrel of Brent crude oil to be delivered in June rose 3.1% to $114.70 early Wednesday. Brent to be delivered in July was also up 3%, at $107.61. Brent oil was trading around $70 per barrel before the war began in late February.

Benchmark U.S. crude gained 3.4% to $103.32 a barrel.

The UAE’s announcement Tuesday that it was leaving OPEC as of Friday was being closely watched by oil markets. OPEC accounts for roughly 40% of global oil output, and the UAE is one of its largest oil producers. The UAE has resisted OPEC production quotas in recent years, wanting to sell more oil to the rest of the world.

Initially oil prices fell on expectations that supply will rise.

“The UAE’s exit will increase (oil) output,” ING Bank strategists Warren Patterson and Ewa Manthey wrote in a research note on Wednesday. “The UAE has been increasingly frustrated over recent years by its output being constrained by OPEC production quotas, which have kept it well below its potential.”

“However, before this can be tapped, there must be a resolution in the Persian Gulf that allows for uninhibited energy flows through the Strait of Hormuz once again," they added.

As U.S.-Iran negotiations for a permanent end to the Iran war remain stalled and the Strait of Hormuz, where roughly one fifth of the world’s oil passed through before the war, was still largely closed. Short term impacts on oil prices still depend mainly on prospects for reopening the waterway, analysts said.

Iran has offered to reopen the Strait of Hormuz if the United States lifts a blockade on its ports. So far, the U.S. appears to be ruling out a deal that excludes the Islamic Republic’s nuclear program.

On Tuesday, Wall Street retreated from its recent record highs. The benchmark S&P 500 fell 0.5% and the Dow industrials edged 0.1% lower. The technology-heavy Nasdaq composite dropped 0.9%.

Artificial intelligence -related stocks led the losses. Chip company Broadcom lost 4.4%, Nvidia fell 1.6% and Micron Technology lost 3.9%. Alphabet, Amazon, Microsoft and Meta Platforms are reporting quarterly results on Wednesday.

In other dealings early Wednesday, the U.S. dollar rose to 159.77 Japanese yen from 159.62 yen. The euro was trading at $1.1701, down from $1.1712.