TOKYO 鈥� Stocks closed lower on Wall Street ahead of a key decision on interest rates by the Federal Reserve. The S&P 500 fell 1.1% Tuesday. The Nasdaq composite and the Dow Jones Industrial Average also lost ground. Treasury yields were mostly higher. Traders are waiting to see how high the Fed will raise interest rates at its meeting that ends Wednesday. The Fed has been raising the cost of borrowing money in hopes of slowing down the hottest inflation in four decades. Traders worry the Fed may overshoot its goal and slow down the economy so much it causes a recession.
THIS IS A BREAKING NEWS UPDATE. AP鈥檚 earlier story follows below.
Stocks fell broadly in afternoon trading on Wall Street Tuesday ahead of a key decision on interest rates by the Federal Reserve.
The S&P 500 index fell 0.9% as of 3:37p.m. Eastern. More than 90% of stocks and every sector in the benchmark index lost ground as traders wait to see at its meeting that ends Wednesday.
The Dow Jones Industrial Average fell 257 points, or 0.8%, to 30,763 and the Nasdaq fell 0.7%.
鈥淭he market is certainly bracing for the worst and you鈥檙e seeing a little bit of selling pressure coming in,鈥� said Paul Kim, CEO of Simplify ETFs.
Retailers, technology stocks, health care companies and banks were among the biggest weights on the market. Best Buy fell 4.1%, Microsoft slid 0.8%, Abbott Laboratories dropped 1.6% and JPMorgan Chase was 1.8% lower.
U.S. crude oil prices fell 1.5% and weighed down energy stocks. Exxon Mobil fell 0.7%.
Smaller company stocks fell more than the broader market. The Russell 2000 index dropped 1.4%.
Bond yields mostly edged higher. The yield on the 10-year Treasury, which influences mortgage rates, rose to 3.56% from 3.52% from late Monday and is trading at its highest levels since 2011.
The yield on the 2-year Treasury, which tends to follow expectations for Fed action, rose to 3.96% from 3.95% from late Monday and is hovering around its highest levels since 2007.
Stocks have been slumping and Treasury yields rising as the Fed raises the cost of borrowing money in hopes of slowing down the hottest inflation in four decades. The central bank's aggressive rate hikes have been making markets jittery, especially as Fed officials assert their determination to keep raising rates until they are sure inflation is coming under control.
Fed Chair Jerome Powell bluntly warned in a speech last month that the rate hikes would 鈥渂ring some pain.鈥�
鈥淗e has done everything he possibly can to signal that it's going to be another aggressive move,鈥� said Liz Young, head of investment strategy at SoFi. 鈥淗e鈥檚 been clear as a bell about what they鈥檝e been focused on.鈥�
The Fed is expected to raise its key short-term rate by a substantial three-quarters of a point for the third time at its meeting on Wednesday. That would lift its benchmark rate, which affects many consumer and business loans, to a range of 3% to 3.25%, the highest level in 14 years, and up from zero at the start of the year.
Wall Street is worried that the rate hikes could go too far in slowing economic growth and push the economy into a recession. Those concerns have been heightened by data showing that the U.S. economy is already slowing and by companies warning about the impact of inflation and supply chain problems to their operations.
fell 11.7% after slashing its third-quarter earnings forecast because a parts shortage will leave it with as many as 45,000 vehicles unfinished on its lots when the quarter ends Sept. 30. Last week, and General Electric warned investors about damage to their operations from inflation.
The U.S. isn't alone in suffering from hot inflation or dealing with the impact of efforts to fight high prices.
on Tuesday raised its key interest rate by a full percentage point to 1.75%, catching almost everyone off guard as it scrambles to bring down inflation that was measured at 9% in August.
Consumer inflation in Japan jumped in August to 3%, its highest level since November 1991 but well below the 8% plus readings in the U.S. and Europe. The Bank of Japan is set to have a two-day monetary policy meeting later this week, although analysts expect the central bank to stick to its easy monetary policy.
Rate decisions from Norway, Switzerland and the Bank of England are next.
Markets in Europe mostly fell, while markets in Asia gained ground.
鈥斺赌�
Yuri Kageyama and Matt Ott contributed to this report.
Damian J. Troise And Alex Veiga, The Associated Press
