U.S. Stocks Rest Awaiting Fed's Interest Rate Decision

Barry Adams
11 Dec, 2023
New York City

Stocks traded sideways in early trading on Wall Street, and investors awaited rate decisions and inflation reports later in the week.

The S&P 500 index and the Nasdaq Composite lacked direction in Monday's trading after both indexes advanced for the previous six consecutive weeks.

The Federal Reserve is widely expected to hold the fed funds rate between 5.25% and 5.50% for the third time in a row, and investors are looking forward to the central bank's forecast on inflation and annual GDP growth.

Moreover, the European Central Bank and the Bank of England are also expected to leave their reference rates unchanged this week, and the Bank of Japan is expected to follow the trend next week.

Metals and mining stocks were under pressure after China's consumer prices fell 0.3% from a year ago in November and the producer price index declined 3% in the month.

The worries of deflation gripped trading in China, and the Hang Seng index rebounded from the 2% loss in Monday's trading to a decline of 0.8% at close, and the SSE Composite recovered from a loss of 0.7% to close up 0.8%.

On the earnings front, investors are looking ahead to earnings updates from Oracle on Monday, Adobe on Wednesday, and Costco Wholesale on Thursday.

 

U.S. Indexes and Yields

The S&P 500 index gained 0.3% to 4,605.03, and the Nasdaq Composite increased 0.4% to 14,365.12.

The yield on 2-year Treasury notes increased to 4.76%, 10-year Treasury notes inched higher to 4.27%, and 30-year Treasury bonds increased to 4.35%.

Crude oil decreased $0.50 to $70.72 a barrel, and natural gas prices fell 20 cents to $2.37 a thermal unit.

Gold increased $8.84 to $1,994.55 an ounce after the U.S. economy added more than expected jobs in November, raising the prospect that the Federal Reserve is more likely to keep higher rates for longer to bring down inflation to the target rate of 2%.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged higher to 104.27.

 

U.S. Stock Movers

Macy's jumped 16.7% to $20.22 after the department store retailer received a buyout offer of $5.8 billion from Arkhouse Management and Brigade Capital Management.

Occidental Petroleum Corp. declined 0.8% to $56.0 after the company said it agreed to buy CrownRock for $12 billion.

The company said after the merger, free cash flow is expected to increase on a diluted share basis, including $1 billion in the first year based on the WTI crude oil price of $70 per barrel.

Occidental intends to finance the $12.0 billion purchase with the incurrence of $9.1 billion of new debt, the issuance of approximately $1.7 billion of common equity, and the assumption of CrownRock’s $1.2 billion of existing debt.

The deal will add approximately 170,000 barrels of oil equivalent per day and 1,700 undeveloped locations to Occidental's portfolio in the Permian Basin.

The transaction to acquire a Midland, Texas-based company is expected to close in the first quarter of 2024.

Occidental also announced its plan to increase its quarterly cash dividend by 4 cents to 22 cents in February 2024.