Investing.com – Wall Street took a breather on Monday with U.S. equities holding near all-time highs reached after the July employment report last week showed a second consecutive month of positive job creation and financial markets began to once again contemplate the possibility of a rate hike by the Federal Reserve (Fed) arriving by the end of the year.
At 15:46GMT, or 11:46AM ET, the Dow 30 slipped 13 points, or 0.07%, the S&P 500 inched down 1 point, or 0.04%, while the tech-heavy Nasdaq Composite traded down 8 points or 0.15%.
The odds had increased for the U.S. central bank to tighten monetary policy this year after the stellar jobs creation released on Friday, but Fed fund futures continued to ratchet up the possibility, passing the 50% threshold on Monday, with odds of 51.4% of a hike in December, compared to just 43.4% at the close on the final trading day of last week.
The chance for a move in September had also ticked up slightly on Monday to 18%, compared to the prior session’s probability of 15%, according to CME Group’s FedWatch tool.
That was despite the fact that Fed governor Jerome Powell warned that the U.S. economy ran the risk of becoming trapped in a prolonged period of subdued growth that required lower rates than was previously expected, according to an interview released on Monday.
Powell pointed to global risks and reiterated that any return to policy normalization should be “very gradual”.
“The probability of an era of weaker growth, lower potential growth, for a longer period of time – that worries me more than it used to,” Powell told the Financial Times (FT).
With no major economic data on Monday’s schedule, U.S. stocks seemed ready to take a pause as the second quarter earnings season winded down this week.
All-in-all, the reports for the April-June period had ended up better than feared, with S&P 500 company earnings currently expected to fall just 2.6% compared to the 4.7% forecast before the reporting season began.
Among big movers on earnings released Monday, Sotheby’s (NYSE:BID) soared nearly 15% as the auction house reported earnings per share blew through analyst forecasts.
On the downside, Dean Foods (NYSE:DF) plunged 5% after missing consensus on second quarter profit.
News Corp (NASDAQ:NWSA) was due after Monday’s close while Walt Disney Company (NYSE:DIS) and a slew of retailers such as Macy’s Inc (NYSE:M), Nordstrom Inc (NYSE:JWN) or Kohl’s Corporation (NYSE:KSS) would release their own numbers later in the week.
Monday was also a busy day for M&A, with Walmart (NYSE:WMT) $3 billion deal to buy online retailer Jet.com in the largest ever acquisition of an e-commerce startup.
Mattress Firm Holding (NASDAQ:MFRM) skyrocketed 114% after South African furniture retailer Steinhoff International Holdings (JO:SNHJ) agreed to purchase the largest U.S. specialty bedding vendor for around $2.4 billion in cash. The bid, worth $64 per share, represents a 114% premium over Mattress Firm’s Friday closing price.
Netflix (NASDAQ:NFLX) however fell almost 3% as Alibaba denied rumors that it was planning to invest in the U.S. video service.
Meanwhile, oil prices surged more than 2% in North American trade on Monday, as sentiment was boosted amid renewed hopes for an agreement among exporters to freeze output.
According to people familiar with the matter, several OPEC members, including Venezuela, Ecuador and Kuwait, are now pushing for fresh talks on setting new limits for oil production this fall in an effort to stabilize the market.
Qatar’s Energy Minister Mohammed Bin Saleh al-Sada, who is serving as OPEC president this year, said in a statement on Monday the cartel will hold on an informal meeting in Algeria on September 26-28 on the sidelines of the International Energy Forum.
U.S. crude futures jumped 2.99% to $43.05 by 15:47GMT, or 11:47AM ET, while Brent oil gained 2.55% to $45.40.