Nasdaq, Dow Jones, S&P 500 trade cautiously with Fed on horizon

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The stock market is mixed Monday, with investors hesitant to place big bets with the upcoming FOMC meeting and a host of big-name earnings.

The Nasdaq (COMP.IND) -0.6% and S&P (SP500) -0.1% have turned lower. The Dow (DJI) +0.1% is up slightly.

ight of 11 S&P sectors are higher, with Energy the top gainer. But the megacap sectors are the ones in the red, having an outsize impact with Info Tech at the bottom.

“SPX got up to 4,012 on Friday, a few points shy of the unfilled gap at 4,017, and ~10% off recent lows,” BTIG’s Jonathan Krinsky said. “Our view remains that it’s prudent to reduce risk above 4,000 as we are still in the confines of a bear market.”

The market is still pricing in a near-80% of the FOMC hiking by 75 basis points on Wednesday. Growth worries pulled forward the terminal rate to January from February last week, according to fed funds futures.

The 10-year Treasury yield is up 4 basis points to 2.82% and the 2-year is up 2 basis points to 3.01%.

“The monthly trend of higher yields in the first half of the month, and lower yields in the second, reflects the current tension between downside growth concerns and upside inflation risks,” Morgan Stanley said.

Along with the Fed the earnings calendar is packed, with 175 S&P companies reporting, including the rest of the megacaps. Despite below-par performance so far, Citi says resilience in the results still supports its thesis for a second-half gain in stocks.

Among active issues, SVB is the top gainer in the S&P after an upgrade, as it rebounds from last week’s selloff. Newmont Mining is the biggest decliner as it cut production guidance and profit plunged.