U.S. Stocks Lack Direction As Fed Announcement Looms

Stocks have shown a lack of direction over the course of the trading session on Monday, with the major averages bouncing back and forth across the unchanged line after posting strong gains last Friday.

Currently, the major averages are narrowly mixed. While the Dow is down 32.00 points or 0.1 percent at 40,557.34, the Nasdaq is up 45.49 points or 0.3 percent at 17,403.37 and the S&P 500 is up 8.87 points or 0.2 percent at 5,467.97.

The choppy trading on Wall Street comes as traders seem reluctant to make significant moves ahead of the Federal Reserve’s monetary policy meeting this week.

While the Fed is widely expected to leave interest rates unchanged, traders will be looking to the accompanying statement for additional clues about a possible rate cut in September.

According to CME Group’s FedWatch Tool, there is currently an 89.6 percent chance the Fed will lower rates by a quarter point in September and a 10.1 percent chance of a half point rate cut.

Later in the week, the focus is likely to shift to the Labor Department’s closely watched monthly jobs report for July.

Earlier in the day, stocks benefitted from optimism ahead of the release of earnings news from several major technology companies.

Microsoft (MSFT), Meta Platforms (META), Apple (AAPL) and Amazon (AMZN) are among the companies due to report their quarterly results this week.

Sector News

Reflecting the lackluster performance by the broader markets, most of the major sectors are showing only modest moves on the day.

Airline stocks have shown a significant move to the downside, however, with the NYSE Arca Airline Index tumbling by 2.2 percent.

A steep drop by the price of crude oil is also weighing on energy stocks, dragging the Philadelphia Oil Service Index and the NYSE Arca Oil Index down by 1.9 percent and 1.6 percent, respectively.

Brokerage and steel stocks are also seeing notable weakness, while networking stocks are seeing considerable strength, driving the NYSE Arca Networking Index up by 1.2 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Japan’s Nikkei 225 Index surged by 2.1 percent, while Hong Kong’s Hang Seng Index jumped by 1.3 percent.

Meanwhile, most European stocks moved to the downside on the day. The French CAC 40 Index slumped by 1.0 percent and the German DAX Index fell by 0.5 percent, although the U.K.’s FTSE 100 Index bucked the downtrend and inched up by 0.1 percent.

In the bond market, treasuries have moved to the upside as traders look ahead to the Fed decision later this week. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.7 basis points at 4.172 percent.

Business News