MW: U.S. stocks flat as investors dither ahead of Yellen speech
U.S. stocks traded struggled for direction Monday, erasing small early losses to trade near unchanged as investors await a speech by Federal Reserve Chairwoman Janet Yellen at the end of the week.
The S&P 500 SPX, +0.01% rose 0.48 point to 2,184.35, while the Dow industrials DJIA, +0.04% rose 15.61 points, or 0.1%, to 18,568.18. The Nasdaq Composite COMP, +0.18% rose 12.73 points, or 0.2%, to 5,251.11. Stocks opened with modest losses in light volume.
Some market bulls are taking a more cautious near-term stance in the wake of a rally that took al three major indexes to all-time highs last week. Jeffrey Saut, chief investment strategist at Raymond James, said the firm’s trading model had called for a short-term trading top heading into last Friday’s option expiration, with the potential for further selling if the S&P 500 breaks below 2,175.
“The quid pro quo is that if the recent intraday high of 2,193.81 is taken out to the upside, all downside bets are off,” he said in a note. He emphasized that longer term, the model doesn’t show any “real vulnerability” until mid- or late-September “as the equity markets transition from an interest-rate-driven bull market to an earnings-driven bull market.”
Analysts said the week largely looks set to be quiet until a closely watched speech by Federal Reserve chief Janet Yellen at the central bank’s summer retreat. In her Friday morning speech in Jackson Hole, Wyo., Yellen may indicate the Fed is ready to raise interest rates as soon as next month.
Read: Money markets deliver stealth rate rise even as Fed stands pat
“The markets currently have March priced in for the next rate hike, and if Yellen is seriously determined to move earlier, she must take advantage of Friday’s opportunity to drive that message home,” said Craig Erlam, senior market analyst at Oanda, in a note. “The rest of the week is expected to be rather quiet,” Erlam added.
Read: Stock-market investors will hang on Yellen’s every word at Jackson Hole
On Sunday, the Fed’s No. 2 official, Stanley Fischer, said the central bank is close to its employment and inflation targets, suggesting he is open to further interest rate increases this year. That helped the dollar DXY, +0.01% gain on Monday.
Weakness in oil futures appeared to help set the tone for equities in early action. September West Texas Intermediate crude CLU6, -2.56% slumped 2.7% to $47.21 a barrel, with some analysts blaming a rise in the U.S. oil-rig count last week. Meanwhile, Morgan Stanley analysts poured cold water on hopes that major oil producers will freeze production.
There are no top-tier U.S. economic releases or earnings reports expected on Monday.
Last week, the S&P 500 SPX, +0.01% and Dow DJIA, +0.04% scored record closes early in the week, then finished the week little changed and just below their record-setting levels.
See: MarketWatch’s Economic Calendar
Company news: Drug giant Pfizer Inc. PFE, +0.49% confirmed it plans to buy biotech Medivation Inc. MDVN, +19.82% in a move aimed at adding a leading prostate-cancer drug to Pfizer’s portfolio. Pfizer’s stock rose 0.6%, while Medivation jumped 19.8%.
In other deal news, ChemChina said Monday that a U.S. national-security regulator had cleared its planned $43 billion acquisition of Swiss seed company Syngenta AG SYNN, +11.08% SYT, +10.44%
CST Brands Inc. CST, +0.16% —which runs gas stations and convenience stores—agreed to be bought by Circle K parent Alimentation Couche-Tard Inc. ATD.B, +5.82% in a deal valued at $4.4 billion. Shares of CST Brands rose 0.1%.
Chip maker Intersil Corp. ISIL, +20.40% jumped 20.8% after Japan‘s Renesas Electronics Corp. 6723, -3.09% said it is in talks to buy the U.S. company.
Ailing drugmaker Valeant Pharmaceuticals International Inc. VRX, +8.40% rose 7.3% after confirming it has hired a new chief financial officer.
Other markets: European stocks SXXP, +0.20% inched down as early gains evaporated, while Asian markets closed mixed. Gold futures GCZ6, -0.44% traded lower.
