US open: Oil stocks diverge as investors take profits ahead of Fed's hike

US equity markets were mostly down on Monday, as investors looked towards the Federal Reserve policy meeting later this week.

The Dow Jones Industrial Average rose 0.15% to 19,7787.11 points, but the S&P 500 fell 0.04% to 2,258.57 points, and the Nasdaq declined 0.5% to 5,417.30 points, at 1519 GMT.

Meanwhile, oil prices advanced after non-OPEC countries agreed to cut production by 558,000 barrels per day at the weekend, with the majority of the cuts pledged by Russia.

Comments from Saudi Arabia’s energy minister Khalid al-Falih also helped to underpin oil prices, as he said the country will “cut substantially to be below” the target agreed in November by the cartel.

Brent crude gained 3.79% to $56.47 per barrel, while West Texas Intermediate rose 3.97% to $53.63 at 1427 GMT, while shares in oil giants ExxonMobil and Chevron were up 2.12% and 2.54%.

Gold on Comex was crept up 0.03% to 1,162.20 per troy ounce at 1435 GMT.

The Fed’s two-day meeting kicks off on Tuesday, with the rate announcement on Wednesday and market participants largely pricing in a 25 basis points hike.

In currency markets, the dollar was up 0.1% to 115.44 against the yen, having earlier risen to its best level against the Japanese currency amid expectations of Fed rate hike. But it dipped 0.52% to 0.9420 versus the euro and was down 0.68% to 0.7898 versus sterling.

Michael Hewson, chief market analyst at CMC Markets, said the strong dollar had prompted some profit taking.

"Some of today’s caution could well be predicated on some caution that the recent sharp rise in the US dollar might well prompt some Fed policymakers to soft pedal and go with a dovish hike.

“While no-one expects the Fed to do anything other than hike by 25 basis points the tone of the subsequent statement and press conference could well be dovish.”

In corporate news, defence contractor Lockhead Martin dropped 4.16% after President-elect Donald Trump tweeted that the cost for the F35 stealth fighter program is “out of control”. This followed a similar tweet last week when he said that an order for new Air Force One plane’s should be cancelled which sent Boeing’s shares falling.

On better news for the planemaker Boeing nudged up 0.54% after securing a deal worth up to $16.6bn to sell 80 jetliners to Iran, the latest deal for the country after economic sanctions were lifted in January.

Chipotle Mexican Grill rose 2.57% after it was confirmed that founder Steve Ells will be the only chief executive after co-chief Monty Moran will retire in 2017.

Dow Jones - Risers

Exxon Mobil Corp. (XOM) $90.73 1.94%
Chevron Corp. (CVX) $117.90 1.80%
Johnson & Johnson (JNJ) $114.23 1.75%
Verizon Communications Inc. (VZ) $52.19 1.35%
Wal-Mart Stores Inc. (WMT) $70.90 1.17%
Pfizer Inc. (PFE) $32.06 1.15%
Merck & Co. Inc. (MRK) $61.83 0.98%
E.I. du Pont de Nemours and Co. (DD) $75.35 0.67%
Procter & Gamble Co. (PG) $84.89 0.62%
McDonald's Corp. (MCD) $121.96 0.57%

Dow Jones - Fallers

Nike Inc. (NKE) $50.99 -1.42%
American Express Co. (AXP) $73.88 -1.19%
Apple Inc. (AAPL) $112.63 -1.16%
Visa Inc. (V) $78.49 -0.82%
Walt Disney Co. (DIS) $104.01 -0.81%
Unitedhealth Group Inc. (UNH) $158.95 -0.73%
International Business Machines Corp. (IBM) $165.59 -0.56%
JP Morgan Chase & Co. (JPM) $85.17 -0.37%
Goldman Sachs Group Inc. (GS) $241.04 -0.33%
3M Co. (MMM) $178.02 -0.26%