Wall Street stocks fell sharply in morning trading on
Tuesday ahead of a key decision on interest rates by the Federal Reserve. The
S&P 500 index fell 52.31 points or 1.34% to 3,847.58 as of 10.15 am
Eastern. More than 95% of stocks and every sector in the benchmark index
witnessed losses as traders watch how far the Fed will raise interest rates at
its meeting that ends Wednesday.

The Dow Jones Industrial Average fell 412.93 points or
1.33% to 30,606.75. The Nasdaq fell 119.47 points or 1.04% to 11,415.55.

US crude oil price fell 2.5% and pulled down energy stocks.
Hell lost 2.2%.

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Bond yields moved higher. The yield on the two-year
Treasury, which tends to follow expectations for Fed action, rose to 3.97% from
3.95% late Monday. It is trading at its highest levels since 2007.

The 10-year yield, which helps determine mortgage rates,
increased to 3.58% from 3.52%. It is trading at its highest levels since 2011.

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Stocks have been falling and Treasury yields increasing as
the Fed hikes key interest rates in a bid to tame the hottest inflation in four
decades. Markets are concerned as the Fed officials assert their determination
to keep increasing 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 “bring some pain.”

The central bank is expected to raise its key short-term
rate by three-quarters of a percentage point for the third time at its meeting
on Wednesday. The hike would lift the benchmark rate to a range of 3% to 3.25%,
the highest level in 14 years, and up from zero at the start of the year.

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Investors are worried that the rate hikes could go too far
in slowing economic growth and push the economy into a recession. Those
concerns have been bolstered by data showing that the US economy is already
slowing and by companies warning about the impact of inflation and supply chain
issues on their operations.

Ford tanked 8.8% after cutting its third-quarter earnings
forecast because a parts shortage will leave it with as many as 45,000 vehicles
in inventory lacking parts. Last week, General Electric and FedEx warned
investors about damage to their operations from inflation.

Markets in Europe were mostly lower, while markets in Asia
ended with significant gains.