(Sharecast News) – Rising bond yields and oil prices were limiting investor risk appetite on Monday morning, as markets treaded water ahead of a crucial Federal Reserve policy meeting later in the week.
Within the first 20 minutes of trade on Wall Street, the Dow Jones Industrial Average was up 0.1%, while the Nasdaq fell 0.3% and the S&P 500 slipped 0.2%.
With no major economic data on tap during the session, the focus was firmly on the Fed as policymakers meet on Wednesday afternoon to make their latest decision.
Stocks slumped at the end of last week, with the S&P 500 falling 1.2% on Friday on the back of rising oil prices and forecast-beating economic data which reignited fears that inflation could stay ‘sticky’ for some time yet.
All eyes on the Fed
The Federal Open Market Committee is widely expected to hold rates steady this week. However, analysts are holding out on the possibility of one further rate hike to 5.50-5.75% later this year.
“As past announcements have shown that it does not like to surprise markets with its immediate rate decision, the pause looks to be a near certainty,” said analysts at Lloyds Bank.
“So more interesting will be whether Fed says anything new in its guidance on future rate moves, in particular, whether they have peaked and how soon they are likely to be cut.”
On Monday, 10-year Treasury yields were back close to levels not seen since 2007, up 1.5 basis points at 4.347%.
Chevron and oil stocks rise
Chevron edged higher after the oil giant said that operations at its Wheatstone liquefied natural gas facility in Australia, which is currently being hit by worker strikes and a fault last week, is back at full production.
The stock was likely also being lifted by a 1% jump in the price of Brent crude to $94.81 a barrel – its highest level since November 2022. Prices have risen by around $30 over the past three months on the back of increased demand from China and production cuts in Russia and Saudi Arabia.
Exxon Mobil, ConocoPhillips and EOG Resources were also putting in decent gains on Monday.
PayPal and DoorDash were being moved by broker ratings changes; MoffettNathanson cut its recommendation for PayPal from ‘outperform’ to ‘market perform’, while Mizuho Securities upgraded DoorDash from ‘neutral’ to ‘buy’.
Meanwhile, comments from Bernstein were likely weighing on the shares of Arm, after the bank started coverage of the newly listed stock with an ‘underperform’ stance. The chip designer was down 7% at $56.54 in early deals, having initially surged to a high of $69 on its market debut last week.
