Wall Street Stocks At Record Highs As Fed Meets

Global stocks mostly rose Tuesday, with US indices hitting fresh records ahead of a key Federal Reserve decision and the leading Paris benchmark notching its first record in 21 years.

All three major US indices ended at records for the third straight day, extending a recent bullish run fueled by strong corporate earnings ahead of Wednesday's announcement from the Fed.

Earlier, the CAC 40 in Paris rose 0.5 percent to break intra-day and closing price records set 21 years ago, before the Internet bubble burst.

Frankfurt also advanced while London pulled back.

Asian stock markets fell as investors remain on edge about the outlook, with Hong Kong and Shanghai weighed down by the latest Covid outbreak in China that led authorities to reimpose strict containment measures.

Following a two-day gathering, the US Federal Reserve is on Wednesday expected to announce plans to begin tapering its huge stimulus program as the economy recovers.

A day later, the Bank of England is seen likely to raise its key interest rate for the first time in more than three years as inflation soars.

"Attention has shifted towards central banks, as we gear up for a tapering announcement from the Fed and a possible rate hike from the BoE," said IG analyst Chris Beauchamp.

"This does mark quite the sea change from the dominant policy backdrop of the last 18 months, but of course is a signal that things are moving on from the emergency phase as growth recovers and inflation picks up."

With several countries already starting to lift interest rates, traders are now preparing for the end of the cheap cash era, which has helped propel markets to record or multi-year highs.

On Tuesday, the Reserve Bank of Australia said it would no longer artificially maintain low yields on three-year bonds, making it the latest to step back from its easy money strategy.

But the Fed's Wednesday gathering is the main focus of attention.

"The elephant in the room is headline and underlying inflation, which are higher than the (Fed policy board) was anticipating," said Standard Chartered Bank analyst Steve Englander.

Despite the fact that rising interest rates would adversely affect businesses, Wall Street's record run has been driven by strong earnings from major firms.

The vast majority of companies beat expectations, also defying concerns about the impact of surging input costs and spiking Covid infections in the third quarter.

Pfizer again lifted its 2021 profit and revenue outlook on Tuesday, bolstered by the latest surge in Covid-19 vaccinations, including regulatory approvals for boosters and shots for younger populations.