The S&P 500 index (.SPX) closed barely changed on Monday as expectations that the Federal Reserve will become less aggressive with its interest rate hikes were offset by lingering worries about inflation.
The Dow edged lower, and the Nasdaq Composite (.IXIC) ended off the day’s highs.
Investors are awaiting comments Tuesday from Fed Chair Jerome Powell, who some strategists expect could say that more time is needed to show inflation is under control.
Money market bets were showing 77% odds of a 25-basis point hike in the Fed’s February policy meeting.
A consumer prices report due Thursday could be key for rate expectations, said Quincy Krosby, chief global strategist, LPL Financial in Charlotte, North Carolina. “The CPI report this week is going to be essential for fine-tuning the Fed funds futures market.”
After recent strong market gains, “you’re seeing a little bit of profit-taking ahead of the CPI number due out this week,” said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago.
The technology sector (.SPLRCT) gained as Treasury yields fell. Consumer discretionary stocks (.SPLRCD) also rose, with Amazon.com Inc (AMZN.O) up after Jefferies said it saw cost pressures easing for the e-commerce giant in the second half of the year.
Also, S&P 500 companies are about to kick off the fourth-quarter earnings period, with results from top U.S. banks expected later this week.
According to preliminary data, the S&P 500 (.SPX) lost 2.74 points, or 0.07%, to end at 3,892.34 points, while the Nasdaq Composite (.IXIC) gained 66.13 points, or 0.63%, to 10,635.96. The Dow Jones Industrial Average (.DJI) fell 111.48 points, or 0.33%, to 33,519.13.
Friday’s jobs report, which showed a moderation in wage increases, also lifted hopes that the Fed might become less aggressive in its rate-hike push to reduce inflation.
Tesla Inc (TSLA.O) rose after the electric-vehicle maker indicated longer waiting times for some versions of the Model Y in China, signaling the recent price cuts could be stoking demand.
Macy’s Inc (M.N) and Lululemon Athletica Inc (LULU.O) fell after both retailers issued disappointing holiday-quarter forecasts.