U.S. equities finished the first trading session of the week mixed after rallying to record highs last week, amid lingering trade concerns with further tariffs between China and the U.S. going into effect. Meanwhile, caution may have ensued ahead of Wednesday’s highly-expected Fed rate hike. Treasury yields ticked higher and the U.S. dollar was nearly unchanged, while crude oil prices rallied on supply worries and gold dipped. News on the equity front surrounded a number of M&A announcements.
The Dow Jones Industrial Average (DJIA) fell 181 points (0.7%) to 26,562, the S&P 500 Index was down 10 points (0.4%) to 2,919, and the Nasdaq Composite rose 6 points (0.1%) to 7,993. In moderate volume 853 million shares were traded on the NYSE and 2.4 billion shares changed hands on the Nasdaq. WTI crude oil rose $1.30 to $72.08 per barrel and wholesale gasoline was $0.04 higher at $2.04 per gallon. Elsewhere, the Bloomberg gold spot price ticked $0.48 lower to $1,999.56 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was nearly unchanged at 94.21.
Treasuries dipped, as the yield on the 2-year note was flat at 2.81%, while the yields on the 10-year note and the 30-year bond ticked 1 basis point (bp) higher to 3.08% and 3.22%, respectively.
Today’s report begins the economic week that will likely be headlined by Wednesday’s monetary policy decision from the Federal Open Market Committee (FOMC). A solid economic foundation has the probability of a Fed rate hike near 100%, but the accompanying statement and economic projections, as well as the subsequent press conference from Chairman Jerome Powell, are likely to face intense scrutiny. The markets are a bit less certain of a December rate increase, as cooler-than-expected August inflation data has countered signs that wage growth is picking up, while an escalation in global trade tensions may curb the Fed’s appetite and/or need to aggressively tighten policy.
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