NEW YORK (Reuters) – The S&P 500 index erased early gains to close nearly flat on Monday as expectations that the Federal Reserve will become less aggressive with its interest rate hikes were offset by lingering worries about inflation.

The Dow ended lower, and the Nasdaq Composite ended well off the day’s highs.

Investors are awaiting comments Tuesday from Fed Chair Jerome Powell, who some strategists expect could say more time is needed to show inflation is under control.

Money market bets were showing 77% odds of a 25-basis point hike in the Fed’s February policy meeting.

A consumer prices report due Thursday could be key for rate expectations, said Quincy Krosby, chief global strategist, LPL Financial in Charlotte, North Carolina. “The CPI report this week is going to be essential for fine-tuning the Fed funds futures market.”

Investors also may have sold some shares after recent strong market gains, said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago. “You’re seeing a little bit of profit-taking ahead of the CPI number due out this week.”

The technology sector gained as Treasury yields fell. Consumer discretionary stocks also rose, with Amazon.com Inc up 1.5% after Jefferies said it saw cost pressures easing for the e-commerce giant in the second half of the year.

Also, S&P 500 companies are about to kick off the fourth-quarter earnings period, with results from top U.S. banks expected later this week.

The Dow Jones Industrial Average fell 112.96 points, or 0.34%, to 33,517.65, the S&P 500 lost 2.99 points, or 0.08%, to 3,892.09 and the Nasdaq Composite added 66.36 points, or 0.63%, to 10,635.65.

Shares of Broadcom Inc fell in late trading to end down 2% after Bloomberg, citing people familiar with the matter, reported that Apple Inc plans to drop a Broadcom chip in 2025 and use an in-house design instead.

Friday’s jobs report, which showed a moderation in wage increases, lifted hopes that the Fed might become less aggressive in its rate-hike push to reduce inflation.

Tesla Inc shares rose 5.9% after the electric-vehicle maker indicated longer waiting times for some versions of the Model Y in China, signaling the recent price cuts could be stoking demand.

Macy’s Inc fell 7.7% and Lululemon Athletica Inc dropped 9.3% after both retailers issued disappointing holiday-quarter forecasts.

Volume on U.S. exchanges was 11.35 billion shares, compared with the 10.90 billion average for the full session over the last 20 trading days.

Advancing issues outnumbered decliners on the NYSE by a 1.85-to-1 ratio; on Nasdaq, a 1.48-to-1 ratio favored advancers.

The S&P 500 posted 13 new 52-week highs and two new lows; the Nasdaq Composite recorded 129 new highs and 32 new lows.

(Additional reporting by Shubham Batra, Amruta Khandekar and Ankika Biswas in Bengaluru; Editing by Shounak Dasgupta and Richard Chang)

SYDNEY (Reuters) – Asian shares rallied on Monday as hopes for less aggressive U.S. rate hikes and the opening of China’s borders bolstered the outlook for the global economy.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6%, with South Korean shares gaining 1.1%.

Japan’s Nikkei was closed for a holiday but futures were trading at 26,235, compared with a cash close on Friday of 25,973. S&P 500 futures added 0.2% and Nasdaq futures 0.3%.

Earnings season kicks off this week with the major U.S. banks, with the Street fearing no year-on-year growth at all in overall earnings.

“Excluding Energy, S&P 500 EPS (earnings per share) is expected to fall 5%, driven by 134 bp of margin compression,” wrote analysts at Goldman Sachs. “Entering reporting season, earnings revision sentiment is negative relative to history.

“We expect further downward revisions to consensus 2023 EPS forecasts,” they added. “China reopening is one upside risk to 2023 EPS, but margin pressures, taxes, and recession present greater downside risks.”

Beijing has now opened borders that had been all but shut since the start of the COVID-19 pandemic, allowing a surge in traffic across the nation.

Bank of America analyst Winnie Wu expects China’s economy, the second-largest economy in the world, to benefit from a cyclical upturn in 2023 and anticipates market upside from both multiple expansion and 10% EPS growth.

Sentiment on Wall Street got a boost last week from a benign blend of solid U.S. payroll gains and slower wage growth, combined with a sharp fall in service-sector activity. The market scaled back bets on rate hikes for the Federal Reserve.

Fed fund futures now imply around a 25% chance of a half-point hike in February, down from around 50% a month ago.

That will make investors ultra sensitive to anything Fed Chair Jerome Powell might say at a central bank conference in Stockholm on Tuesday.

It also heightens the importance of U.S. consumer price index (CPI) data on Thursday, which is forecast to show annual inflation slowing to a 15-month low of 6.5% and the core rate dipping to 5.7%.

“We at NatWest have lower than consensus CPI forecasts, and if right that will likely solidify the market pricing of 25bps vs 50bps,” said NatWest Markets analyst John Briggs.

“In context, it should still be seen as a Fed that is still likely to hike a few more times and then hold rates high until inflation’s decline is guaranteed – to us that means a 5-5.25% funds rate.”

Friday’s mixed data had already seen U.S. 10-year yields drop a steep 15 basis points to 3.57%, while dragging the U.S. dollar down across the board.

Early Monday, the euro was holding firm at $1.0664, having bounced from a low of $1.0482 on Friday. The dollar eased to 131.63 yen, away from last week’s top of 134.78, while its index was down a fraction at 103.800.

The Brazilian real had yet to trade after hundreds of supporters of far-right former President Jair Bolsonaro were arrested after invading the country’s Congress, presidential palace and Supreme Court.

The drop in the dollar and yields was a boon for gold, lifting it to a seven-month peak around $1,870 an ounce. [GOL/]

Oil prices were steady for the moment after sliding around 8% last week amid demand concerns. [O/R]

Brent gained 26 cents to $78.83 a barrel, while U.S. crude rose 30 cents to $74.07 per barrel.

(Reporting by Wayne Cole; Editing by Bradley Perrett)

TOKYO, Jan 6 (Reuters) – Asian equities gained on Friday while the dollar hovered near a one-month high as investors braced for crucial U.S. jobs data later in the day that should provide clues on how aggressive the Federal Reserve will be in tightening policy.

Japan’s Nikkei (.N225) rose 0.39%, while South Korea’s Kospi (.KS11) jumped 0.77%. Australia’s stock benchmark (.AXJO) was 0.56% higher.

Hong Kong’s Hang Seng (.HSI) rallied 0.6%, although mainland blue chips <.CSI300) were flat in early trading.

MSCI’s broadest index of Asia-Pacific shares (.MIAP00000PUS) added 0.29%, putting it on track for a 1.55% advance for the first week of 2023, its best weekly performance in a month.

U.S. E-mini stock futures ticked up 0.35%, pointing to a small bounce after the 1.16% overnight slide for the S&P 500 (.SPX).

Wall Street sold off amid worries that a robustness in the jobs market would keep the Fed raising rates for longer, after data released on Thursday showed a bigger than expected rise in private payrolls and a drop in jobless claims.

“There is concern that the labor market isn’t showing any signs of cooling,” putting financial markets “very much on edge”, said Tony Sycamore, a market analyst at IG.

“But the important one is going to be tonight, and I don’t think the bogey man is going to be in the cupboard with tonight’s number.”

According to a Reuters survey of economists, non-farm payrolls are forecast to show on Friday that 200,000 jobs were created in December, easing from November’s 263,000 pace.

U.S. two-year Treasury yields spiked to a more than two-month high of 4.497% overnight but eased to 4.460% in Tokyo. The 10-year yield , which rose as high as 3.784% in New York, dropped to 3.726%.

The U.S. currency remained elevated versus major peers on Friday. The dollar index , which measures the greenback against six counterparts including the euro and yen, was trading little changed at 105.11 after jumping 0.91% overnight and touching 105.27 for the first time since Dec. 8.

The dollar index is up 1.57% this week, putting it on course to snap a streak of three losing weeks. It is shaping up for the best performance since late September.

The greenback added 0.27% to 133.755 yen , taking it back towards Thursday’s one-week high of 134.045.

The euro edged 0.09% higher to $1.05295, but remained close to the overnight low of $1.0515, a level last seen on Dec. 12.

Crude oil rose, extending gains from Thursday after data showed lower fuel inventories.

Brent crude futures were last 79 cents, or 1%, higher at $79.48 a barrel. U.S. West Texas Intermediate crude futures were up 80 cents, or 1.1%, at $74.47 a barrel.

Jan 4 (Reuters) – The S&P 500 finished higher on Wednesday but below its session peak after volatile trading following the release of minutes from the Federal Reserve’s last meeting, which showed officials laser-focused on controlling inflation even as they agreed to slow their interest rate hiking pace.

Officials at the Fed’s Dec. 13-14 policy meeting agreed the U.S. central bank should continue increasing the cost of credit to control the pace of price increases, but in a gradual way intended to limit the risks to economic growth.

Investors were poring over the Fed’s internal deliberations for clues about its future path. After the meeting, Fed Chair Jerome Powell had said more hikes were needed, and took a more hawkish tone than investors had expected back then.

While some money managers said the minutes included no surprises, the market appeared to have been holding onto hopes for some sign that the Fed was at least considering easing its policy tightening.

“The market is like a kid asking for ice cream. The parents say ‘no,’ but the market keeps asking because the parents have caved in the past,” said Burns McKinney, portfolio manager at NFJ Investment Group LLC in Dallas. “The market still thinks it’s going to get ice cream, just not as soon as they thought before.”

McKinney pointed to the minutes for evidence of Fed officials’ concern that an unwarranted easing of financial conditions would complicate their efforts to fight inflation.

The Dow Jones Industrial Average (.DJI) rose 133.4 points, or 0.4%, to 33,269.77; the S&P 500 (.SPX) gained 28.83 points, or 0.75%, to 3,852.97; and the Nasdaq Composite (.IXIC) added 71.78 points, or 0.69%, to 10,458.76.

The S&P’s rate-sensitive technology index (.SPLRCT) lost some ground after the minutes before finishing up 0.26%. Even the bank sector (.SPXBK), which benefits from higher rates, pared gains but still finished up 1.9%.

Energy (.SPNY) was the weakest of the S&P’s 11 major industry sectors, closing up 0.06%, while real estate (.SPLRCR) was the strongest, closed up 2.3%, followed by a 1.7% gain in materials (.SPLRCM).

Also on Wednesday, Minneapolis Fed President Neel Kashkari also stressed the need for continued rate hikes, setting out his own forecast that the policy rate should initially pause at 5.4%.

“The Fed minutes are a good reminder for investors to expect rates to remain high throughout all of 2023. Amid a persistently strong job market, it makes sense that fighting inflation remains the name of the game for the Fed,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office in New York.

“Bottom line is that, even though we flipped the calendar, the market headwinds from last year remain.”

Market participants now see a 68.8% chance of a 25 basis points rate hike from the Fed in February, but still see rates peaking just below 5% by June. .

Earlier in the day, data showed U.S. job openings in November indicating a tight labor market, giving the Fed cover to stick to its monetary tightening campaign for longer, while other data showed manufacturing contracted further in December.

U.S. equities were pummeled in 2022 on worries of a recession due to aggressive monetary policy tightening, with the three main stock indexes logging their steepest annual losses since 2008.

On the Nasdaq 100 (.NDX) the largest gainer was U.S. shares of JD.Com Inc , which rose 14.7% on hopes for a post-COVID-19 recovery in China. The largest decliner was Microsoft , down 4.4% after a UBS analyst downgraded the stock to “neutral” from a “buy” rating.

Advancing issues outnumbered declining ones on the NYSE by a 4.30-to-1 ratio; on Nasdaq, a 2.74-to-1 ratio favored advancers.

The S&P 500 posted five new 52-week highs and no new lows; the Nasdaq Composite recorded 84 new highs and 51 new lows.

On U.S. exchanges 11.35 billion shares changed hands, compared with the 10.83 billion-share average for the last 20 trading days, which included some volume weakness due to the holidays.

Investing.com — U.S. stocks were off to a slow start in the new year, weighed by slumping tech giants as investors await this week’s minutes of the Federal Reserve’s last meeting.

At 16:04 ET (21:04 GMT), the Dow Jones Industrial Average was down 11 points or flat, while the S&P 500 was down 0.4% and the NASDAQ Composite was down 0.7%. All three indexes had recovered some of their losses during the day.

Apple shares (NASDAQ:AAPL) fell 3.7% and closed just below a $2 trillion market value for the first time since 2021. Meanwhile, shares of electric vehicle maker Tesla Inc (NASDAQ:TSLA) fell more than 12% on Tuesday, after falling 65% for 2022, after it reported lower-than-expected deliveries for the quarter and year.

Stocks ended 2022 with their worst showing since 2008 as interest rates rose throughout the year, pressuring once high-flying growth and big tech stocks.

The Fed has been on a campaign to stop inflation, embarking on the fastest pace of interest rate increases in decades, and it hasn’t finished yet. At December’s meeting, the central bank indicated rates would continue to rise until it was satisfied its mission to tame price increases was completed.

The S&P lost more than 19% last year, while the tech-heavy Nasdaq fell 33%.

Investors are eager to put the year in the rearview mirror and are hoping economic data this week can help push them forward. On Friday, the jobs report for December is due, and data on manufacturing is expected this week as the Fed minutes arrive. There will also be oil inventory data and job openings data for investors to absorb.

The market expects the Fed to raise its policy rate by a quarter of a percentage point when it next meets in February, which would be a slower pace than recent rate moves but still on an upward trajectory.

Casino stocks rose on the prospect of China’s Macau gambling mecca reopening after COVID-related shutdowns and restrictions. Wynn Resorts Limited (NASDAQ:WYNN) shares were up 3.8%, while Las Vegas Sands Corp (NYSE:LVS) shares were up 2.6%.

Exxon Mobil Corp (NYSE:XOM) stock fell 3.4% and Chevron Corp (NYSE:CVX) shares fell 3% after crude oil prices slumped around 4% on Tuesday.

Investing.com – U.S. stock futures were trading higher during Monday’s evening deals, with market participants looking ahead to a busy week of economic data and the release of the U.S. Federal Reserve’s latest meeting minutes.

By 6:356pm ET (11:35pm GMT) Dow Jones Futures and S&P 500 Futures were up 0.3% while Nasdaq 100 Futures added 0.2%.

Ahead in Tuesday’s session, investors will be looking towards the S&P Global (NYSE:SPGI) Manufacturing PMI and construction spending, JOLTS data as well as the minutes of the Fed’s latest policy meeting.

Later in the week, ADP nonfarm employment and December’s nonfarm payrolls report will also be closely watched.

On the earnings front, Walgreens Boots Alliance Inc (NASDAQ:WBA) and Constellation Brands Inc (NYSE:STZ) are set to report quarterly results on Thursday.

On the bond markets, United States 10-Year rates were at 3.831%.