Stocks stalled Monday, ending mostly lower after rising oil prices and ongoing worries about the financial sector gave investors little reason to buy a day ahead of a Federal Reserve meeting.
Disappointment that Saudi Arabia is not boosting production by more than 200,000 barrels a day sent oil prices higher, fanning concerns about inflation. Light, sweet crude rose $1.38 to settle at $136.74 per barrel on the New York Mercantile Exchange.
Energy companies rose but sectors like airlines and financials logged sizable losses.
With little economic data arriving, investors focused on the price of oil and the Fed’s two-day meeting, which lets out on Wednesday. Most investors expect the central bank to keep its key federal funds rate on hold, and in its economic statement, emphasize the rising threat of inflation.
Denis Amato, chief investment officer at Ancora Advisors in Cleveland, questions how the Fed will balance weakness in areas of the economy like the financial sector with concerns about the weak dollar and the rising inflation that low interest rates cause.
“We think the Fed is sort of in a quandary here ... if they raise rates, they run the risk of having some negative impact on the economy and if they don’t raise rates, they run the risk of negatively influencing the dollar. That trend is driving up oil, which is impairing the economy,” he said.
The Dow Jones industrial average slipped 0.33, or less than 0.01 percent, to 11,842.36.
Broader stock indicators ended mixed after a day of back-and-forth trading. The Standard & Poor’s 500 index edged up 0.07, or 0.01 percent, to 1,318.00, and the Nasdaq composite index fell 20.35, or 0.85 percent, to 2,385.74.
But the market’s overall direction was downward. Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where volume came to 1.09 billion shares compared with a heavy 2.04 billion seen Friday as stocks fell sharply and as several types of options contracts expired.
Bond prices were narrowly mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was at 4.17 percent, the same as late Friday. The dollar rose against most other major currencies, while gold prices fell.
“You’ve got the Fed and some key economic reports coming out this week, especially with housing, and that has kept things quiet,” said Todd Salamone, director of trading at Schaeffer’s Investment Research. “People are going to be on the sidelines to see what the next Fed action or words are.”
The modest moves Monday followed a rough week that ended with a sharp pullback Friday amid worries about the financial and automotive sectors and a resurgence in oil prices. The major indexes dropped by more than 1.5 percent Friday, and the Dow fell more than 200 points to close at its lowest level since March.
The financial sectors’ woes continue: Citigroup Inc. is in the midst of cutting its investment banking staff by 10 percent, and Goldman Sachs Group Inc. is also eliminating jobs, The Financial Times reported. Citigroup fell 75 cents, or 3.9 percent, to $18.55, and Goldman fell $5.18, or 2.8 percent, to $178.59.
Amato contends that troubles in sectors like the financials are severe enough that they will spill over to other areas of the economy and send the broader stock market lower.
“You can’t have a functioning economy with all the banks under that much extreme pressure,” he said.
Other names in the sector declined as investors fretted about the overall well-being of the financials.
Bank of America Corp. fell $1.22, or 4.5 percent, to $25.88; the stock hit a 52-week low of $25.83. American International Group Inc. logged a 52-week low of $30.12 and finished down $1.80, or 5.6 percent, to $30.30.
The rise in oil after the weekend summit punished sectors like airlines and rewarded companies focused on energy.
United Airlines’ parent UAL Corp. fell $1.07, or 15 percent, to $6.09, while Delta Air Lines Inc. slid 68 cents, or 12 percent, to $5.
But energy names like Exxon Mobil Corp. advanced $2.79, or 3.3 percent, to $87.70, while Haliburton Co. rose $2.98, or 6 percent, to $53.01 and set a 52-week high of $53.11.
United States Steel Corp. rose $8.23, or 4.5 percent, to $191.02 after a Goldman Sachs analyst wrote in a note to investors that the company is best poised among steel makers to benefit from higher prices.
The Russell 2000 index of smaller companies fell 5.92, or 0.82 percent, to 719.81.
Overseas, Japan’s Nikkei stock average fell 0.61 percent. Britain’s FTSE 100 rose 0.83 percent, Germany’s DAX index rose 0.17 percent, and France’s CAC-40 edged up 0.05 percent.