US open: Stocks little changed as investors price in rate hike

US equity markets were little changed on Monday as investors priced-in expectations of Federal Reserve interest hike this week, while oil prices continued their descent.

At 1540 GMT, the Dow Jones Industrial Average was down 0.19% to 20,863.08, the S&P 500 fell 0.1% to 2,370.29 and the Nasdaq was flat at 5,866.35.

In currency markets, the dollar was down 0.55% against the pound to 0.8177, fell 0.16% versus the yen to 114.61 and was flat against the euro to 0.9371.

The Fed's two-day policy meeting kicks off on Tuesday, amid expectations it will raise the funds rate by 25 basis points to between 0.75% and 1%.

Craig Erlam, senior market analyst at Oanda, said: "The clearly coordinated effort to convince investors that a rate hike is firmly on the table on Wednesday, from a position in which it appeared out the question, has almost worked too well with markets now almost fully pricing one in.

"The risk is that the Fed now struggles to live up to expectations and should it for whatever reason delay raising interest rates, it may have unintentionally dramatically misguided investors which could result in significant volatility come Wednesday."

Investors will also be watching out for changes to the Fed's interest rate hike timetable.

"Some analysts and economists have begun wondering if up to four hikes could now be delivered this year. However, wage inflation, the big miss on last Friday’s jobs report, remains weak, which could reduce the Fed’s appetite to continue hiking rates too quickly", strategists at Monex Europe said.

Interest rate announcements are also due from the Bank of England, the Bank of Japan and the Turkish central bank this week.

Meanwhile, oil prices were mixed after data from Baker Hughes on Friday showed the number of active rigs drilling for oil rose by eight to 617 last week, marking the eighth weekly rise.

West Texas Intermediate was down 0.37% to $48.31 a barrel and Brent crude was 0.13% weaker at $51.30.

"If the US keeps the current production pace, the OPEC cuts could no longer sustain the global oil prices but reducing supply. WTI-bears are touted at $50," said Ipek Ozkardeskaya, senior market analyst at London Capital Group.

In corporate news, US-listed shares of HSBC were up 1.33% following news that the lender has hired ex-Prudential boss Mark Tucker to replace Douglas Flint as chairman after 22 years at the world's fourth largest bank.

Intel was down 1.87% after reports that the chip giant has agreed to buy Israeli technology group Mobileye for $14bn to $15bn. Mobileye shares rocketed 29.7%.

First Solar fell 0.99% after being booted from the S&P 500 late on Friday.

Herbalife rose 2.41% after Billionaire investor Carl Icahn increased his stake in the nutrition drinks marketing business.

Boeing was down 0.16% after Morgan Stanley downgraded the airplane maker to ‘Equalweight’ from ‘Overweight’ on valuation concerns.

US-listed shares in Amec climbed 12.37% after London listed Wood Group said it would buy the oil-services firm.