The close: Wall Street loses ground as Fed signals 2 more hikes this year - Canadanewsmedia
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The close: Wall Street loses ground as Fed signals 2 more hikes this year

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U.S. Treasury yields jumped and the dollar pared earlier losses on Wednesday after the Federal Reserve raised interest rates and signaled that two more hikes could be coming this year.

Ten-year notes yielded a one-week high, while two-year note yields rose to a three-week peak after the Fed’s decision to raise its benchmark overnight lending rate a quarter of a percentage point, to a range between 1.75 per cent and 2 per cent.

Policymakers also projected a slightly faster pace of rate increases in the coming months, with two additional hikes expected by the end of this year, compared to one previously.

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“The labor market has continued to strengthen … economic activity has been rising at a solid rate,” the Fed’s rate-setting committee said in unanimous statement after the end of a two-day meeting.

Benchmark 10-year U.S. Treasury notes last fell 9/32 in price to yield 2.9903 per cent, from 2.957 per cent late on Tuesday.

The 30-year bond last fell 11/32 in price to yield 3.1096 per cent, from 3.092 per cent Tuesday.

The dollar index, which measures the greenback against a basket of currencies, rose 0.09 per cent, with the euro up 0.06 per cent to $1.175.

“There was some question about the December rate hike and it looks like the Fed is sticking to that plan and I would say this is a very mild negative for risk markets,” said Matthew Forester, chief investment officer at Lockwood Advisors Inc in King of Prussia, Pennsylvania.

“Each rate hike becomes more difficult for the risk markets and the real economy to digest.”

Investors also awaited policy meetings later this week at the European Central Bank and the Bank of Japan.

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The Dow Jones Industrial Average fell 117.74 points, or 0.46 per cent, to 25,202.99, the S&P 500 lost 11.19 points, or 0.40 per cent, to 2,775.66 and the Nasdaq Composite dropped 8.10 points, or 0.11 per cent, to 7,695.70

Wall Street had opened slightly in the black after a court approved AT&T’s $85-billion takeover of Time Warner , but reversed those gains in afternoon trading.

Time Warner shares jumped about 1.8 per cent after approval of the AT&T deal, which is expected to trigger other corporate takeovers. AT&T dropped roughly 6.2 per cent, sending the S&P telecom services index down more than 4 per cent, its biggest single-day fall in nearly four months..

In Toronto, the S&P/TSX composite index closed down slightly, falling 23.16 points, or 0.14 per cent, at 16,292.55.

Marijuana stocks paced the health care sector’s 1.1-per-cent gain. Canopy Growth Corp. rose 3.3 per cent, while Aurora Cannabis Inc. jumped 1.8 per cent.

Leading the index were Aecon Group Inc., up 3.7 per cent, NovaGold Resources Inc, up 3.7 per cent, and Precision Drilling Corp., higher by 3.7 per cent.

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Lagging shares were Ivanhoe Mines Ltd., down 8.3 per cent, Prometic Life Sciences Inc., down 7.1 per cent, and Interfor Corp., lower by 5.0 per cent

The pan-European FTSEurofirst 300 index rose 0.09 per cent and MSCI’s gauge of stocks across the globe shed 0.28 per cent.

Emerging market stocks lost 0.76 per cent.

Trade tensions were pressuring the Mexican peso and Canadian dollar, which pared earlier gains to lose 0.36 per cent and 0.2 per cent, respectively, versus the greenback.

Oil prices, which had started the day in the red, settled higher after a report by the Energy Information Administration indicated U.S. crude inventories fell more than anticipated last week and while gasoline and distillate stocks surprised with unexpected declines.

U.S. crude settled up 0.42 per cent, at $66.64 per barrel, while Brent gained 1.13 per cent on the day, settling at $76.74.

“The demand metrics here are amazing for crude oil and gasoline,” said John Kilduff, a partner at Again Capital in New York. “Put the exports of crude on top of that, and it’s just a really bullish report.”

Italian government bonds were in demand, as well, after Paolo Savona, the country’s new EU Affairs Minister, said the euro was “indispensable.”

The comments by Savona, who has previously expressed hostile views on the euro, followed statements earlier in the week by Italy’s new coalition government that it had no plans to leave the euro zone.

In another reminder of the danger of trade disputes, shares in Chinese telecommunications giant ZTE Corp fell as much as 41.5 per cent, wiping $3-billion off its market value, as it resumed trade after agreeing to pay up to $1.4-billion in penalties to the U.S. government.

Reuters

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Pipeline protesters defy eviction order, say they'll meet with officials

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Kwitsel Tatel, left, speaks to media during a press conference at Camp Cloud near the entrance of the Kinder Morgan Trans Mountain pipeline facility in Burnaby, B.C., on Saturday July 21, 2018. THE CANADIAN PRESS/Ben Nelms

BEN NELMS/The Canadian Press

Protesters at an anti-pipeline camp in Burnaby, B.C., say they will meet with officials to discuss safety measures, but they will not comply with a city-issued evacuation order.

The City of Burnaby says there are safety concerns surrounding “Camp Cloud,” including a two-storey wooden watch house and a fire that protesters describe as sacred and ceremonial.

Protest organizer Kwitsel Tatel says the participants will not leave, nor will they extinguish their fire.

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Tatel suggests the structures around the camp’s sacred fire could be modified, if only to refocus the attention away from the physical camp and back to the anti-pipeline protest.

She adds that snuffing out the fire would constitute a breaking of both B.C. Supreme Court and Coast Salish law.

The protesters say the city’s notice, which was issued on Wednesday and expired early Saturday, was written without adequate consideration of a recent court decision or consultation with camp residents.

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2 Uncle Ben's rice varieties recalled in eastern Canada

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Mars Food Canada is voluntarily recalling select Uncle Ben's rice products, including its Fast & Fancy Broccoli and Cheddar, and Country Chicken flavoured rice, after learning about possible salmonella contamination in the seasoning pouches in both products. The recall only affects products sold in eastern Canada.

In a statement, the company said it is conducting the recalls "out of an abundance of caution."

"We are working with a limited number of impacted retailers in eastern Canada to have the product removed from store shelves," it said.

The company said while the majority of affected products have already retrieved, customers should check any packages of rice featuring any of the lot codes listed here. It says affected products should not be consumed.

The recall comes amid a flurry of food product recalls affecting Loblaws and Ritz products. The Canadian Food Inspection Agency said Saturday it is recalling Ritz bits sandwich crackers and No Name chicken nuggets for risk of salmonella contamination.

The breaded nuggets, offered at Maxi, Provigo, AXEP and Intermarché grocery stores in Quebec, were sold in boxes of 907 grams with the best before date "2019 MA 15."

The recalled Ritz crackers were sold in packs of 180 grams, 30 X 42 grams and 42 grams. The best before dates are November 2018 to March 2019. 

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Fiat Chrysler chooses Jeep exec Mike Manley to replace ailing CEO Marchionne

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Fiat Chrysler Automobile announced Saturday that CEO Sergio Marchionne's health had suddenly deteriorated following surgery and that its board of directors had chosen Jeep executive Mike Manley to replace him.

Marchionne, a 66-year-old Italian-Canadian, joined Fiat in 2004 and led the Turin-based company's merger with bankrupt U.S. carmaker Chrysler. Manley, 54, had been heading the Jeep brand since June 2009 and the Ram brand from October 2015.

The announcement, at the end of an urgently convened board meeting, marked the end of the Marchionne era, which included the turnaround of failing Fiat, the takeover of bankrupt U.S. automaker Chrysler and the spinoffs of the heavy machinery and truck maker CNH and supercar maker Ferrari.

Fiat Chrysler said in a statement that due to his deteriorating health Marchionne "will be unable to return to work."

Marchionne, 66, had already announced he would step down in early 2019, so the board's decision, to be confirmed at an upcoming shareholders' meeting, will "accelerate" the CEO transition process, the statement said.

Chrysler CEO Sergio Marchionne, left, is seen with Jeep brand President and CEO Mike Manley at the Jefferson North Assembly Plant, in Detroit. (Carlos Osorio/Associated Press)

The British-born Manley had been one of Marchionne's closest collaborators at the group, and in a previous role had been responsible for product planning and all sales activities outside of North America.

Marchionne was reported to have had surgery for a shoulder problem about three weeks ago in Switzerland.

Fiat is considered a close-knit family, and FCA chairman John Elkann said he was "profoundly saddened to learn of Sergio's state of health. It was a situation that was unthinkable until a few hours ago, and one that leaves us all with a sense of injustice."

Elkann didn't give details of Marchionne's health problems, adding that his "first thoughts go to Sergio and his family." He asked everyone to respect Marchionne's "privacy and that of all those who are dear to him."

Elkann is a grandson of the late Gianni Agnelli, the longtime Fiat dynasty chieftain.

The boards of Ferrari and CNH Industrial, which makes heavy machinery and trucks, were called urgently to meet on Saturday in Turin, Fiat's headquarters.

Ferrari announced that Louis Camilleri, an Egyptian-board Maltese and longtime executive at Philip Morris International, the tobacco company, was chosen to replace Marchionne as CEO of the sports car maker. 

A Fiat Chrysler sign is seen outside the Chrysler World Headquarters in Auburn Hills, Mich., in this file photo. (Carlos Osorio/Associated Press)

Known for sleeping only briefly each night, Marchionne, who is also a lawyer, was holding multiple leadership roles in the companies, notably as CEO of FCA — Fiat Chrysler Automobiles, as well as CEO and chairman of Ferrrari.

In early June, Marchionne made his last major presentation as CEO of Fiat Chrysler. On that occasion he announced there would be a major investment thrust to make more electrified cars, although traditional engines will continue to dominate production. He unveiled FCA's plans through 2022.

Brands that have been driving the company's revenues include Jeep SUVs, Ram trucks and the premium brands, Maserati and Alfa Romeo. Those brands were expected to account for 80 per cent of revenues by 2022, compared to 65 per cent currently.

The passenger-car brands of Fiat and Chrysler have been less profitable.

At the June appearance, Marchionne also predicted Fiat was about to eliminate its debt.

Next corporate results are set to be released on July 25.

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