Higher interest rates and oil prices send U.S. stocks lower

NEW YORK—Major U.S. 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.

The S&P 500 fell 3.81 points, or 0.1 percent, to 2,915.56. The Dow Jones Industrial Average lost 69.84 points, or 0.3 percent, to 26,492.21. The Nasdaq composite added 14.22 points, or 0.2 percent, to 8,007.47. The Russell 2000 index of smaller-company stocks gained 3.49 points, or 0.2 percent, 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 3.10 percent from 3.07 percent 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 percent to $42.73 and consumer goods maker Procter & Gamble lost 1.4 percent to $83.12.

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 have climbed recently because OPEC isn’t producing more oil, while Iran is exporting less after the U.S. withdrew from the international nuclear deal with Iran and announced more sanctions on the country.

Benchmark U.S. crude rose 0.3 percent to $72.28 a barrel in New York. Brent crude, the standard for international oil prices, rose 0.8 percent to $81.87 a barrel in London. Brent crude is at its highest price since November 2014.

ConocoPhillips rose 1.4 percent to $78.11 and Philips 66 added 1.3 percent to $114.88.

Companies around the world have announced $3.26 trillion in deals this year, according to Dealogic, far above the $2.49 billion in deals that were struck over the first three quarters of 2017. The recent U.S. corporate tax cut and low interest rates have contributed to that trend.

If the Fed does raise interest rates Wednesday, it would be the ninth increase since late 2015 and would take the benchmark rate to a range of 2 percent to 2.25 percent, with another increase expected this year and more to come in 2019.

Wholesale gasoline added 0.6 percent to $2.07 gallon. Heating oil rose 0.8 percent to $2.31 a gallon. Natural gas rose 1.4 percent to $3.08 per 1,000 cubic feet.