US stocks muted as rate hike worries linger, Russia tension simmers

By Stephen Culp

NEW YORK (Reuters) - Wall Street was mixed on Monday and gold prices rose on lingering concerns over the rate hike path of the U.S. Federal Reserve as investors largely shrugged off the aborted Russian mutiny over the weekend.

Tech stocks, particularly chips, put the Nasdaq out front, with the S&P 500 showing a more modest gain.

But healthcare and financials pulled the blue-chip Dow into negative territory.

Market participants expect the central bank to raise the Fed funds target rate by another 25 basis points in July, but the path beyond is less clear and dependent on economic data.

Financial markets are pricing in a 74.4% probability of the July rate hike, according to CME's FedWatch tool.

"Market participants are willing to take the Fed at face value, that rates will be higher for longer," said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management in Seattle. "We are seeing some of the data go in the right direction, which means we could anticipate the Fed will be able to avoid another hike."

U.S. data on tap this week includes new orders for durable goods, housing data, the Commerce Department's final take on first-quarter GDP, consumer surveys from The Conference Board and University of Michigan, culminating on Friday with the wide-ranging Personal Consumption Expenditures (PCE) report, which covers consumer income/outlays, and crucially, inflation.

Geopolitical turmoil also held risk appetites in check in the wake of an aborted mutiny in Russia, which appeared to reveal cracks in Russian President Vladimir Putin's grip on power.

The Dow Jones Industrial Average fell 50.94 points, or 0.15%, to 33,676.49, the S&P 500 gained 2.61 points, or 0.06%, to 4,350.94 and the Nasdaq Composite added 29.76 points, or 0.22%, to 13,522.27.

European stocks pared an earlier sell-off after the U.S. opening bell as tensions surrounding Russia and the notion of interest rates staying higher for longer weighed on interest rates.

The pan-European STOXX 600 index lost 0.01% and MSCI's gauge of stocks across the globe gained 0.09%.

Emerging market stocks lost 0.25%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.34% lower, while Japan's Nikkei lost 0.25%.

U.S. Treasury yields mostly edged lower as investors grappled the Fed's "higher for longer" message even as the economy begins to slow.

Benchmark 10-year notes last rose 3/32 in price to yield 3.7289%, from 3.739% late on Friday.

The 30-year bond last rose 3/32 in price to yield 3.8151%, from 3.82% late on Friday.

The dollar was slightly lower against a basket of world currencies as the yen and the euro advanced and the sterling held steady.

The dollar index fell 0.1%, with the euro up 0.2% to $1.0911.

The Japanese yen strengthened 0.09% versus the greenback at 143.58 per dollar, while Sterling was last trading at $1.2714, up 0.02% on the day.

Oil prices were also showing little movement as Russian political instability was viewed by the market as posing minimal threats to supply.

U.S. crude fell 0.09% to $69.10 per barrel and Brent was last at $74.18, up 0.23% on the day.

Gold inched higher as geopolitical reverberations from the aborted Russian mutiny attracted investors to the safe-haven metal.

 

(This story has been corrected to chnge Rob Haworth's title and firm in paragraph 6)

 

Spot gold added 0.1% to $1,923.69 an ounce.

 

(Reporting by Stephen Culp; additonal reporting by Amanda Cooper in London, editing by Deepa Babington)