Wall Street’s major indexes rose on Monday in choppy trading as energy stocks tracked higher crude oil prices, while investors awaited the Federal Reserve’s interest rate decision later this week.
The energy sector was the biggest gainer in the Standard & Poor’s 500 sector, rising 1.1%, with crude oil prices remaining near $95 per barrel due to lack of supply.
The rise in crude oil prices threatens to keep inflation high even as a series of stronger-than-expected recent economic data has eased concerns about a potential recession without raising fears of an interest rate hike in September.
The consumer discretionary sector was the hardest hit, falling 0.7%, as electric car maker Tesla fell 2.6% to a one-week low, while VF Corp fell 4.2% as Piper Sandler cut its rating to “neutral.” From “overweight”.
Major growth names including Microsoft and Amazon.com fell 0.1% and 0.4%, respectively, as US Treasury yields rose on uncertainty over the path of interest rates until the end of the year. The benchmark 10-year yield is hovering around its highest level since 2007.
“Investors are sitting on their hands right now and waiting to see what the Fed does, its updates to dot charts and perhaps some future direction of interest rates,” said Paul Nolte, market strategist at Murphy & Sylvest Wealth Management.
“There will be another hike before the end of the year and we will see interest rates stay high for a while because inflation is not yet close to its target.”
Traders largely expect the Fed to keep interest rates unchanged at 5.25% to 5.5% during its meeting on Wednesday, while the odds of another pause in November are 66%, according to the CME FedWatch tool.
Goldman Sachs, like other major investors such as JPMorgan Asset Management and Janus Henderson Investors, expects the central bank to raise its economic growth forecasts this week. It also expects prices to peak.
Arm Holdings, the U.K.-based chip designer that debuted Thursday, fell 5.1% after Bernstein began covering the stock with an “underperform” rating.
A decline in chipmakers on concerns about weak demand and a decline in large-cap growth stocks pushed the S&P 500, Nasdaq and Dow to their worst single-day decline on Friday since August 24, with the indexes losing between 0.8% and 1.5%.
At 11:51 a.m. EST, the Dow Jones Industrial Average rose 83.71 points, or 0.24%, to 34,701.95, the S&P 500 rose 12.37 points, or 0.28%, to 4,462.69, and the Nasdaq Composite rose 28.10 points, or 0.20. % at 13736.43.
Chipmaker Micron Technology shares rose 1.3%, following a decline on Friday, after Deutsche Bank raised its stock rating to “buy” from “hold.”
L3Harris Technologies rose 1.7% after Wells Fargo upgraded the aerospace and defense company to “overweight” from “equal weight.”
PayPal Holdings lost 1.3% after MoffettNathanson downgraded the digital payments company to “market perform” from “outperform.”
Declining issues outnumbered advancing ones by a ratio of 1.02 to 1 on the NYSE and by a ratio of 1.46 to 1 on the Nasdaq.
The S&P recorded five new 52-week highs and 11 new lows, while the Nasdaq recorded 24 new highs and 172 new lows.