Investing.com – Wall Street struggled near the unchanged level Tuesday after weak service sector data took a toll on investor sentiment and strong gains achieved in oil during the Labor Day holiday vanished into thin air.
At 11:33AM ET (15:33GMT), the Dow 30 lost 11 points, or 0.06%, the S&P 500 slipped 1 point, or 0.05%, while the tech-heavy Nasdaq Composite edged forward 7 points, or 0.14%.
Though U.S. service sector activity grew for a 79th consecutive month, it still dropped to its weakest level since January 2010 with seven out of 18 industry sectors registering a contraction.
Specifically, the Institute of Supply Management (ISM) said its non-manufacturing purchasing manager's index fell to 51.4 last month from 55.5 in July. Analysts had expected the index to drop to 55.0.
That followed the ISM manufacturing survey published last week, which showed a shocking contraction in activity.
Tuesday’s bad news was the first in a string of data coming out after last Friday’s jobs report in the run up to the Federal Reserve’s (Fed) policy decision at the end of the two-day meeting on September 21 that could affect the path of future tightening.
The read on the ISM non-manufacturing index caused markets to cut bets for a possible rate hike at the next meeting to just 15%, down from 27% ahead of the data and 30% a day earlier.
In fact, according to Investing.com's Fed Rate Monitor Tool, Fed fund futures narrowly kept the chance for a December hike on the table with odds at just 50.7%.
Eyes were also focusing on oil on Tuesday as crude tumbled in midday trade, erasing all of the prior day's strong gains as an agreement between Saudi Arabia and Russia to stabilize the market stopped short of delivering imminent action to tackle a supply glut.
On the ICE Futures Exchange in London, Brent oil for November delivery sank $0.79, or 1.66%, to trade at $46.84 a barrel by 11:33AM ET (15:33GMT).
Brent spiked by more than 5% on Monday to touch an intraday peak of $49.40 after Saudi Arabia and Russia pledged to work together to support the market.
But prices pared gains later in the session to end well off the highs as details of the agreement underwhelmed traders who had been hoping for a production freeze
Meanwhile, crude oil for October delivery on the New York Mercantile Exchange was at $44.37 a barrel, down 7 cents, or 0.1%, from its last settlement on Friday.
Nymex prices surged more than $2.00, or 5%, on Monday to hit a daily peak of $46.53. U.S. crude did not settle on Monday due to the Labor Day holiday.
In company deal news, German pharmaceutical and crops manufacturer Bayer AG (DE:BAYGN) announced that it was now willing to offer more than $65 billion to acquire the world's largest seeds company Monsanto (NYSE:MON).
Furthermore, Danaher Corporation (NYSE:DHR) said it would buy the molecular diagnostics firm CEPHEID (NASDAQ:CPHD) for $53.00 a share in a deal worth $4 billion, while Canadian pipeline company Enbridge will acquire Texas-based Spectra Energy Corp (NYSE:SE) in an all-stock deal valued at approximately $28 billion.