Stocks struggle as Wall Street anticipates a Fed rate hike

Stocks struggled Monday as traders anticipated an interest rate hike Wednesday.

The Dow was down 50 points, the S&P was off by 0.15 percent, and the Nasdaq was little changed.

The energy sector traded 0.4 percent higher as the top performer in the S&P 500 in morning trade. Boeing had the greatest negative impact on the Dow Jones industrial average after Morgan Stanley downgraded the stock to equal weight from overweight.

WTI futures for April delivery recovered earlier losses to trade near $48.49 a barrel just after the U.S. stock market open.

The Federal Open Market Committee is set to raise rates at the conclusion of its two-day meeting on Wednesday. Traders generally expect the Fed to hike three times this year, after the central bank raised rates in December for the second time in just about a decade.

Treasury yields traded higher ahead of the market open Monday. The rate-sensitive 2-year yield (US2Y) was near 1.36 percent, while the benchmark 10-year yield (US10Y) held around 2.59 percent.

“The Fed is fully in focus,” said Jeremy Klein, chief market strategist at FBN Securities. He’s also watching oil prices and any developments ahead of the Dutch general election, scheduled for Wednesday.

The vote is the first of three key European elections this year, which have highlighted a growing nationalist, anti-EU voice in the euro zone. In the Netherlands, populist party leader Geert Wilders is campaigning for greater control of parliament versus the more moderate Dutch Prime Minister Mark Rutte.

The U.S. dollar index traded a touch higher near 101.4, with the euro around $1.066 and the yen near 114.8 yen.

U.S. stocks closed slightly higher Friday after a better-than-expected jobs report, but the Dow Jones industrial average and S&P 500 still posted their worst week of the year so far. U.S. crude oil prices plunged below the psychologically key $50 level after a jump in crude inventories.

Overseas, European stocks traded mostly higher. The STOXX Europe 600 traded about 0.3 percent higher.

The Shanghai composite gained nearly 0.8 percent, while the Hang Seng closed up 1.11 percent. The Nikkei 225 gained 0.15 percent.

In corporate news, Intel (INTC) announced it will buy Israeli driverless technology firm Mobileye (MBLY) for $15.3 billion.

Evelyn Cheng

Reuters contributed to this report.

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