Stocks were cautiously higher in early trading Monday as attention turned to the Federal Reserve’s meeting this week and speculation over whether policy makers will hold rates, or offer clues about future cuts, while merger news drive some names well into the green.
Communication services and real estate were the strongest performers on the Standard & Poor’s 500, both up by about 0.8%, while information technology gained 0.4% and consumer discretionary rose 0.3%. Materials fell the most, decreasing 0.5% while consumer staples was about 0.4% weaker.
“Far and away the biggest potential risk to world markets over the coming week is likely to be what the Federal Reserve decides on Wednesday,” said Derek Holt, vice president and head of capital markets economics at Scotiabank. “We don’t expect a rate change at this meeting but one cannot be fully ruled out.”
Investors will scour the Fed’s statement and summary of economic projections for clues on whether there could be a cut this year. The probability of a 25 basis-point cut this week currently stands at 21% on the CME Group’s FedWatch tool, while 79% predicts a hold in the 2.25% to 2.5% target range for the fed funds rate.
In company news, Array BioPharma (ARRY) surged 57% after it was bought by Pfizer (PFE) for $48 a share. Pfizer was down 0.6%. Sotheby’s (BID) also rallied 57% after agreeing to a $57 per-share takeover attempt by BidFair.
Nucor (NUE) fell 1.8% after guiding for second-quarter earnings between $1.20 to $1.25 a share, down from $2.13 a share in the same period of 2018. Target (TGT) fell 1.6% after a register outage at its stores on Saturday that lasted for about two hours.