U.S. stocks end mostly lower as rate-hike fears weigh on utilities
After fluctuating between slight gains and losses for most of the session, the S&P 500 index SPX, -0.21% ended 4.28 points, or 0.2%, lower at 2,048.04, its second loss in the past three days. The utilities sector was the worst-performing of the index, sliding 1% as the prospect of higher interest rates diminished demand for dividend-paying stocks.
“If you thought a rate hike was coming in June, you would unwind some of your yields plays, and utilities are a yield play,” said Mike Antonelli, equity sales trader at R.W. Baird & Co.
The main indexes drifted between slight gains and losses for most of the day as U.S. markets logged their second-lowest trading volume this year.
Meanwhile, materials shares rose 1.2% — making it the S&P 500’s best-performing sector — as Bayer’s BAYN, -4.82% $62 billion all-cash offer forMonsanto Co. MON, +4.41% boosted shares of other chemicals producers.
The Nasdaq COMP, -0.08% slipped 3.78 points, or 0.1%, to 4,765.78 — also its second drop in three days.
The Dow industrials DJIA, -0.05% shed 8.01 points, or 0.1%, to 17,492.93, to log its fourth drop in the past five days. Microsoft Corp. MSFT, -1.17% and Verizon Communications Inc. VZ, -1.05% were the worst performers on the blue-chip gauge.
Energy shares finished 0.3% lower as crude-oil prices settled at their lowest level in a week. July WTI crude CLN6, -0.66% was last down 33 cents, or 0.7%, to $48.08 a barrel. Oil-field-services firm Baker Hughes Inc. BHI, -0.97% reported Friday that the number of rigs drilling for oil in the U.S. was unchanged last week, while the number of oil rigs in the Permian Basin in West Texas rose.
With earnings season winding down, market strategists said investors would likely focus on remarks from a bevy of Federal Reserve officials slated to speak this week. Most importantly, Fed Chairwoman Janet Yellen is expected to speak on Friday.
According to the fed funds futures market, the likelihood of a June rate hike moved substantially higher after minutes from the Fed’s April meeting — released on Wednesday — showed a majority of voters felt a hike in June would be warranted if the economy continued to improve.
“The significance of the June meeting has only gained more importance after the Fed minutes last week,” said Mohannad Aama, managing director at Beam Capital Management.
Equities closed higher on Friday, when the S&P 500 snapped a three-week losing streak to close up 0.3% on the week. The Nasdaq Composite Index came off a four-week run of declines to gain 1.1%, but the Dow industrials extended a series of weekly losses to four, dropping 0.2%.
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The dollar was on the move Monday. A much-stronger-than-expected April trade surplus for Japan helped lift the yen, which weighed on the dollar USDJPY, -0.79% sending it to ¥109.15 from ¥110.22 late Friday in New York. The Nikkei 225 index NIK, -0.49% closed down 0.5% on yen strength.
Fedspeak in focus: Boston Fed President Eric Rosengren said the U.S. is “on the verge” of meriting a June interest-rate hike, in an interview with the Financial Times that published on Sunday. Two weeks ago, he said rate increases should resume.
St. Louis Fed President James Bullard got the ball rolling early Monday with a speech in Beijing on the economy and monetary policy. San Francisco Fed President John Williams said the election this fall wouldn’t prevent the central bank from raising interest rates, and that a hike in June remains likely.
At 6:30 p.m. Eastern, Philadelphia Fed President Patrick Harker will speak on the economic outlook.
On the data front, a preliminary reading from the Markit flash PMI showed activity in the sector has been lackluster in May. The index came in at 50.5. Readings below 50 signal contraction.
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Stocks to watch: Boeing Co. BA, +0.15% slipped after Vietnamese carrier VietJet Aviation JSC said it had signed a $11.3 billion deal to buy 100 planes from the U.S. airplane maker.
XenoPort XNPT, +56.36% shares rose after the company said it had reached a deal to sell itself to Arbor Pharmaceuticals for $7.03 a share.
Other markets: Gold prices GCM6, -0.27% eased on Monday. Analysts at Citigroup said if the U.S. dollar index DXY, -0.09% breaks through 100 again, gold prices could drop below $1,000 an ounce.
European stocks SXXP, -0.39% traded lower. In Asia, the Shanghai Composite Index SHCOMP, +0.64% rose 0.6%, while the Hang Seng Index HSI, -0.22% dipped 0.2%.