Looming Fed Announcement Leads To Choppy Trading On Wall Street

(RTTNews) - Stocks turned in a relatively lackluster performance on Monday as traders stuck to the sidelines ahead of the Federal Reserve's highly anticipated monetary policy announcement on Wednesday. The major averages eventually ended the session mixed.

While the Nasdaq and the S&P 500 pulled back off last Friday's record highs, the Dow inched up 28.90 points or 0.1 percent to 27,221.35. The Nasdaq fell 36.88 points or 0.4 percent to 8,293.33 and the S&P 500 dipped 4.89 points or 0.2 percent to 3,020.97.

The choppy trading on Wall Street came as traders looked ahead to the Fed announcement, with the central bank widely expected to cut rates by at least 25 basis points.

The U.S. economy is experiencing its longest expansion in history, but the Fed is expected to cut rates in a proactive move aimed at offsetting the negative effects of the U.S.-China trade war.

President Donald Trump has repeatedly urged the Fed to lower rates, claiming in a post on Twitter that the central bank "has made all of the wrong moves."

Assuming the Fed cuts rates as expected, traders are likely to pay close attention to the accompanying statement for clues about the potential for future rate cuts.

On Friday, the Labor Department is due to release it closely watched monthly jobs report, which could also have a significant impact on the outlook for rates.

Employment is expected to climb by 170,000 jobs in July after jumping by a much bigger than expected 224,000 jobs in June, while the unemployment rate is expected to hold at 3.7 percent.

Sector News

Most of the major sectors ended the day showing only modest moves, although substantial weakness was visible among oil service stocks.

Reflecting the weakness in the oil service sector, the Philadelphia Oil Service Index plunged by 4 percent to its lowest closing level in over a month.

The sell-off by oil service stocks came despite an increase by the price of crude oil, with crude for September delivery climbing $0.67 to $56.87 a barrel.

Natural gas stocks also showed a significant move to the downside, dragging the NYSE Arca Natural Gas Index down by 1.6 percent to a ten-year closing low.

Housing and financial stocks also saw notable weakness on the day, while some strength was visible among gold and tobacco stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan's Nikkei 225 Index dipped by 0.2 percent, while Hong Kong's Hang Seng Index slumped by 1 percent.

Meanwhile, U.K. stocks moved sharply higher on the day, although most European stocks turned in a lackluster performance. While the U.K.'s FTSE 100 Index spiked by 1.8 percent, the German DAX Index closed just below the unchanged line and the French CAC 40 Index edged down by 0.2 percent.

In the bond market, treasuries remained positive throughout the session after showing an initial upward move. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.6 basis points to 2.055 percent.

Looking Ahead

The Fed's looming monetary policy announcement is likely to remain in focus on Tuesday, keeping some traders on the sidelines.

Traders are still likely to keep an eye on reports on personal income and spending, consumer confidence, and pending home sales as well as the latest batch of earnings news.