Stocks stagnate early in the session as cautious investors wait for short-term interest rates to rise in March


US stocks were flat early Monday morning after modest gains earlier today, with investors cautiously hedging their bets on higher short-term interest rates as early as March and the earnings season starting this week.

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$ 14,935,901,709

-144.96 (-0.96%)

Investors were cautious after Fed officials said in December that plans to cut ultra-low rates and other economic stimulus that boosted stock prices could be accelerated to cool U.S. inflation. at its highest level in four decades.

On Friday, Wall Street’s benchmark S&P 500 fell 0.4% to 4,677.03, about 2.5% below the January 3 record.

DOLLAR FIRM AS AN INFLATION TEST TEST

The Dow Jones Industrial Average slipped less than 0.1% to 36,231.66. The Nasdaq composite fell 1% to 14,935.90.

Investors estimate the probability that the Fed will hike short-term rates in March at over 79%. A month ago, they saw a less than 39% chance of this happening, according to CME Group.

US stocks stagnated early Monday morning as investors cautiously hedged their bets on higher short-term interest rates that would arrive as early as March.

Record interest rates have helped push up stock prices despite bouts of unease over the coronavirus pandemic.

The Fed has already slowed down bond purchases that pumped money into the financial system to lower commercial lending rates. Notes from its December meeting indicated that Fed officials may halt those purchases faster than expected.

Investors were rocked last week after notes from the latest Fed meeting showed officials believe the U.S. labor market is healthy enough that it no longer needs ultra-low interest rates and other stimulus measures.

This was bolstered by US employment figures on Friday which showed higher-than-expected wages, albeit with only about half of expected hirings.

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Meanwhile, Asian stock markets were mixed on Monday.

Shanghai and Hong Kong have moved forward. Seoul and Sydney declined. Japanese markets were closed for a public holiday.

The prospect of earlier rate hikes “suggests that markets may continue to be disrupted by volatility,” Mizuho Bank’s Tan Boon Heng said in a report.

The Shanghai Composite Index gained 0.2% to 3,587.03 and the Hang Seng in Hong Kong rose 0.7% to 23,658.91.

The Kospi in Seoul lost 1% to 2,926.72 and the S&P ASX 200 in Sydney lost 0.1% to 7,447.10.

Indian Sensex added 0.5% to 60,046.96. Bangkok was flat, New Zealand fell, and Singapore and Jakarta advanced.

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In energy markets, benchmark US crude rose 9 cents to $ 78.99 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 56 cents on Friday to $ 78.90. Brent crude, used to price international oils, added 9 cents to $ 81.84 a barrel in London. It lost 24 cents the previous session to $ 81.75.

The dollar gained 115.81 yen against 115.56 yen on Friday. The euro fell to $ 1.1329 from $ 1.1362.


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