Wall Street mixed, shuffling Fed bets

Trader Edward McCarthy works on the floor of the New York Stock Exchange. Photo / AP

Wall Street was mixed as investors tried to position themselves for a Federal Reserve policy meeting next week as the latest expectations swung back to bets the central bank will stand pat on interest rates.

In 3.09pm trading in New York, the Dow Jones Industrial Average slipped 0.2 per cent. The Nasdaq Composite Index advanced 0.4 per cent. In 2.54pm trading, the Standard & Poor's 500 Index eked out a 0.03 per cent gain.

"It has been a zero conviction market, in line with fragile global sentiment," Michael Ingram, a strategist at BGC Partners in London, told Bloomberg.

"There is a lot of noise right now, mostly the result of central-bank policy uncertainty," said Ingram. "It seems that the view we need higher rates is gaining some traction, but at the same time we still have expectations of further easing in some countries. It's difficult to achieve a coordinated response. This policy disarray is one source of the volatility we are seeing."

US Treasuries rose, amid fresh bets the Fed won't raise rates during its two-day meeting beginning September 20. Benchmark 10-year notes climbed, pushing yields four basis points lower to 1.69 percent as of about 2.45pm in New York.

"More than rates, the curve shape has been consistent, and telling a strong story," Aaron Kohli, fixed-income strategist in New York at BMO Capital Markets , one of the 23 primary dealers that trade with the Fed, told Bloomberg. "Everyone thinks the Fed will be on hold forever."

The Dow moved lower as slides in shares of American Express and those of IBM, each last down 1 percent and 2.7 per cent, outweighed gains in shares of Apple, trading 3.9 per cent higher recently.

Apple shares touched the highest level this year, amid indications of strong demand for its newly released iPhone 7. Meanwhile, rival Samsung is struggling with a recall of its Galaxy Note 7 phones after incidents of its batteries catching fire while charging.

"With the carriers telling Samsung owners that Samsung wants you to take your phone back into the store, well, people are going to look elsewhere," Longbow Research analyst Shawn Harrison told Reuters.

Monsanto's shares rose after Germany's Bayer agreed to buy the US seeds company in a deal worth about US$66 billion, the largest this year, but investors are concerned about regulatory hurdles.

More than rates, the curve shape has been consistent, and telling a strong story.

Bayer agreed to pay US$128 a share for Monsanto; the Leverkusen-based company first offered US$122 a share in May, then US$125 in July, and raised it to US$127.50 last week.

Closing is expected by the end of 2017, the companies said. Bayer said it agreed to a US$2 billion reverse antitrust break fee, "reaffirming its confidence that it will obtain the necessary regulatory approvals."

Investors aren't as confident. Monsanto shares traded 1 percent higher at US$107.20 as of 1.44pm in New York, after rising as high as US$107.75 earlier in the session. Bayer shares closed 0.7 per cent higher in Frankfurt.

"We expect significant antitrust and political hurdles and assign 50 per cent probability of deal completion," analysts at Sanford C Bernstein & Co said in a note, Bloomberg reported. "The market seems to agree."

In Europe, the Stoxx 600 Index ended the session with a decline of 0.1 per cent from the previous close. Germany's DAX index also slipped 0.1 per cent, while France's CAC 40 index fell 0.4 per cent. the UK's FTSE 100 Index rose 0.1 per cent.