Looming Fed Decision Contributing To Choppy Trading On Wall Street

Stocks have shown a lack of direction over the course or morning trading on Monday, with the major averages bouncing back and forth across the unchanged line following the strong upward move seen to close out the previous week.

Currently, the major averages are turning in a mixed performance. While the Nasdaq is down 18.68 points or 0.2 percent at 12,207.90, the S&P 500 is up 1.99 points or 0.1 percent at 4,171.47 and the Dow is up 64.64 points or 0.2 percent at 34,162.80.

The choppy trading on Wall Street comes as traders seem reluctant to make significant moves ahead of the Federal Reserve’s monetary policy announcement on Wednesday.

While the Fed is widely expected to raise interest rates by another 25 basis points, traders will pay close attention to the accompanying statement for clues about the outlook for rates.

Ahead of the meeting, CME Group’s FedWatch Tool is indicating an 88.9 percent chance the Fed will raise rates by 25 basis points and a 58.6 percent chance the central bank will subsequently leave rates unchanged in June.

The Labor Department’s closely watched monthly jobs report is also likely to attract attention later in the week, with the report due to be released on Friday.

Meanwhile, shares of JPMorgan Chase (JPM) have jumped by 3.0 percent after the financial giant announced the acquisition of the substantial majority of assets and assumed the deposits and certain other liabilities of troubled lender First Republic Bank (FRC).

“Our government invited us and others to step up, and we did,” said JPMorgan Chase Chairman and CEO Jamie Dimon. “Our financial strength, capabilities and business model allowed us to develop a bid to execute the transaction in a way to minimize costs to the Deposit Insurance Fund.”

In U.S. economic news, the Institute for Supply Management released a report showing manufacturing activity contracted for the sixth consecutive month in April, although the pace of contraction slowed by more than expected.

The ISM said its manufacturing PMI rose to 47.1 in April from 46.3 in March, with a reading below 50 indicating a contraction. Economists had expected the index to inch up to 46.6.

The Commerce Department also released a report showing an unexpected increase in U.S construction spending in the month of March.

Reflecting the lackluster performance the broader markets, most of the major sectors are showing only modest moves on the day.

Oil service stocks are seeing some weakness amid a steep drop by the price of crude oil, while transportation stocks are extending a rebound from recent weakness.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Monday, with several major markets closed for May Day. Japan’s Nikkei 225 Index advanced by 0.9 percent, while Australia’s S&P/ASX 200 Index rose by 0.4 percent.

Meanwhile, the major European markets all remain closed on the day.

In the bond market, treasuries have moved back to the downside following the rebound seen last Friday. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 6.7 basis points at 3.519 percent.

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