Wall St flat as investors prepare for potential rate hike

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By Yashaswini Swamynathan

U.S. stocks were little changed on Monday as investors preferred to hold their bets ahead of a widely expected interest rate hike by the Federal Reserve later this week.

The Federal Open Market Committee, the central bank’s policy-setting board, is expected to lift interest rates by a quarter point to 0.75 percent-1.00 percent after a two-day meeting that starts on Tuesday.

All the major S&P 500 sectors were trading within a small range, indicating a subdued appetite on Wall Street.

Materials .SPLRCM led the gainers with a mere 0.23 percent rise, while consumer staples were the biggest losers, but off just 0.14 percent.

A blowout monthly jobs number on Friday underscored the strength of the U.S. labor market and the ability of the economy to absorb a rate hike.

Traders have placed a 94 percent bet that Fed Chair Janet Yellen will announce an increase on Wednesday.

Investors will closely watch Yellen’s comments for clues on whether the central bank could get more aggressive on rates as the economy shows signs of improvement.

“Right now the markets appears to be in a wait-and-see phase ahead of the Fed decision,” said Andre Bakhos, managing director at Janlyn Capital in Bernardsville, New Jersey.

At 9:34 a.m. ET (1334 GMT), the Dow Jones Industrial Average .DJI was up 14.93 points, or 0.07 percent, at 20,917.91, the S&P 500 .SPX was up 1.41 points, or 0.06 percent, at 2,374.01 and the Nasdaq Composite .IXIC was up 5.18 points, or 0.09 percent, at 5,866.90.

The dollar, which tends to strengthen as rates climb, was up for the first time in three days, but prices of safe-haven gold also rose due to uncertainty ahead of elections in Europe.

Wall Street ended higher on Friday, but the S&P 500 and the Nasdaq snapped a six-week winning streak as worries about valuations and the lack of detail on President Donald Trump’s policy proposals threw a wrinkle in a post-election rally.

“We’re at a point where no one wants to walk into the dark room first. Even though a rate hike is a known factor, there is still some uncertainty as to whether the economy is going to do what the market has been betting on,” Bakhos said.

Shares of Mobileye (MBLY.N) jumped nearly 30 percent to $61.10 after chipmaker Intel (INTC.O) agreed to buy the driverless technology maker for about $15.3 billion. Intel’s shares were off 0.6 percent.

Nutritional supplements maker Herbalife (HLF.N) rose 3.8 percent to $54.26 after billionaire investor Carl Icahn raised its stake to 24.57 percent.

Boeing (BA.N) was the biggest drag on the Dow, down 0.7 percent following a downgrade by Morgan Stanley.

Advancing issues outnumbered decliners on the NYSE by 1,606 to 940. On the Nasdaq, 1,352 issues rose and 876 fell.

The S&P 500 index showed 17 new 52-week highs and no new lows, while the Nasdaq recorded 33 new highs and five new lows.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Sriraj Kalluvila)

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