Rising bond yields and oil prices were limiting investors’ risk appetite Monday morning, as markets treaded water ahead of a crucial Federal Reserve policy meeting later in the week.
In the first 20 minutes of trading on Wall Street, the Dow Jones Industrial Average rose 0.1%, while the Nasdaq fell 0.3% and the S&P 500 slipped 0.2%.
With no major economic data available during the session, the focus was on the Fed as policymakers meet Wednesday afternoon to make their final decision.
Stocks slumped late last week, with the S&P 500 falling 1.2% on Friday as higher oil prices and better-than-expected economic data reignited fears that the inflation could remain “sticky” for some time to come.
All eyes are on the Fed
The Federal Open Market Committee is widely expected to hold rates steady this week. However, analysts expect rates to rise again to 5.50-5.75% later this year.
“As past announcements have shown that she does not like to surprise markets with her immediate rate decision, the pause appears to be a virtual certainty,” Lloyds Bank analysts said.
“So it will be more interesting to know if the Fed announces anything new in its forecasts on future rate movements, particularly whether they have peaked and how soon they are likely to be reduced.”
As of Monday, 10-year Treasury yields were back near levels not seen since 2007, up 1.5 basis points to 4.347%.
Chevron and oil stocks rise
Chevron rose slightly after the oil giant said operations at its Wheatstone liquefied natural gas plant in Australia, which is currently hit by worker strikes and an outage last week, were back at full production.
The stock was also likely supported by a 1% rise in the price of Brent crude to $94.81 per barrel – its highest level since November 2022. Prices have risen about $30 over the past three months in due to increased demand from China and reduced production in Russia and Saudi Arabia.
Exxon Mobil, ConocoPhillips And EOG Resources also made decent gains on Monday.
PayPal And PorteDash were moved by changes in broker ratings; MoffettNathanson reduced his recommendation for PayPal from “outperform” to “market perform,” while Mizuho Securities upgraded DoorDash from “neutral” to “buy.”
Meanwhile, Bernstein’s comments likely weighed on the actions of Arm, after the bank began hedging the newly listed stocks with an “underperform” position. The chip designer was down 7% at $56.54 in early trading, after initially hitting a high of $69 in its market debut last week.
