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Wall Street unsettled ahead of inflation data, Fed meeting

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Traders work on the floor at the New York Stock Exchange in New York City, May 15, 2024.




(Reuters) — Wall Street slipped on Monday as wary investors steered clear of risky assets ahead of a key inflation reading and a meeting of the Federal Reserve this week, which could provide clues on the central bank’s policy-easing path over the next few months.

Indexes closed slightly lower on Friday following a choppy week, after conflicting data showed that while Nonfarm Payrolls numbers for May were much stronger than expected, unemployment had ticked higher and household surveys were betraying signs of economic distress.

“Investors were hoping for a more polarized set of data points, but instead, the unemployment number increasing, in contrast to the actual jobs that were added, are confusing a lot of people, making the job of the Fed more difficult,” said Peter Andersen, founder of Andersen Capital Management.

Attention now turns to the Consumer Price Index inflation report for May on Wednesday as well as the conclusion of the Fed’s two-day policy meeting, in which the central bank is overwhelmingly expected to hold interest rates steady.

Markets dialed back expectations for rate cuts by the Fed in September after Friday’s data, with the odds of a reduction standing at 50%. Expectations had risen as high as 69% last week.

Pricing also implies just one cut this year versus two prior to the payrolls numbers, according to LSEG data.

“Right now, interest rates are what I would call at equilibrium and are perfectly positioned for a growing steady economy. I would caution the Fed on making any changes at this point,” Andersen said.

Nvidia slipped 0.1% in the wake of a 10-for-one stock split that went into effect after markets closed on Friday, leading to chatter about the chances of its inclusion in the blue-chip Dow.

At 9:40 a.m. ET, the Dow Jones Industrial Average was down 118.55 points, or 0.31%, at 38,680.44, the S&P 500 was down 13.16 points, or 0.25%, at 5,333.83, and the Nasdaq Composite was down 31.72 points, or 0.19%, at 17,101.41.

Eight of the S&P 500’s 11 sectors were in the red, led by a 0.8% decline in financial stocks, while the small-cap Russell 2000 index slipped 0.8%.

Apple was flat ahead of the iPhone maker’s annual developer conference for updates on how it is integrating artificial intelligence into its offerings.

Southwest Airlines jumped 7.3% after activist investor Elliott Investment Management disclosed it has built up a $1.9 billion position in the company.

CrowdStrike, KKR & Co and GoDaddy rose between 1.7% and 7.7% after S&P Dow Jones Indices said the companies would be included in the S&P 500 as of June 24.

Diamond Offshore Drilling added 8.8% after oilfield services firm Noble said it would buy the smaller rival in a $1.59 billion deal.

Advanced Micro Devices dropped 4.1% after Morgan Stanley downgraded the chip stock to “equal weight” from “overweight.”

Declining issues outnumbered advancers by a 2.37-to-1 ratio on the NYSE, and by a 2.27-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week high and three new lows, while the Nasdaq recorded 17 new highs and 93 new lows.

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