Wall Street retreats on back of higher interest rates and oil prices

Major US indexes finished mostly lower Tuesday as rising interest rates hurt stocks that pay big dividends and higher oil prices pushed transportation and shipping companies lower. The S&P 500 index fell for the third day in a row.

Oil prices continued to rise after a weekend meeting of OPEC and its allies ended without an increase in oil production. That's helped energy companies, but it is pressuring airlines and other companies that will have to pay more for fuel. Higher oil prices can also ripple through the economy and increase inflation, and that's helped push interest rates higher this week.

On Wednesday the Federal Reserve is expected to increase its benchmark interest rate for the third time this year. Investors have been sure for months that the Fed would raise rates at this meeting, so they'll be focusing on the Fed's economic projections and Chairman Jay Powell's press conference afterward.

"He'll want to say as little as possible about tariffs, about fiscal policy, and say as little as possible about any advice the president may be giving him and the Federal Reserve about how to run monetary policy," said David Kelly, chief global strategist for JPMorgan Funds. But Kelly said the reporters will likely probe Powell's views on all of those topics.

The S&P 500 fell 3.81 points, or 0.1 per cent, to 2,915.56. The Dow Jones Industrial Average lost 69.84 points, or 0.3 per cent, to 26,492.21. The Nasdaq composite added 14.22 points, or 0.2 per cent, to 8,007.47. The Russell 2000 index of smaller-company stocks gained 3.49 points, or 0.2 per cent, to 1,708.80.

Bond prices kept falling as the Fed meeting began, sending yields higher. The yield on the 10-year Treasury note rose to 3.09 per cent from 3.07 per cent a day earlier.

Rising bond yields tend to hurt high-dividend companies, which many income- seeking investors see as substitutes for bonds. Among utilities, Southern Co. fell 2.5 per cent to $US42.73 and consumer goods maker Procter & Gamble lost 1.4 per cent to $US83.12.

Stocks usually do well when the Fed starts to raise interest rates because the higher rates reflect solid economic growth, which is associated with strong company profits. But as the rate increases continue, in line with the Fed's goal of keeping inflation in check, the effect on stocks can become negative as economic growth slows.

Oil prices continued to rise after a weekend meeting of OPEC and its allies ended without an increase in oil production. Oil prices have also climbed recently because Iran is exporting less oil after the US withdrew from the international nuclear deal with Iran and announced more sanctions on the country.