U.S. stocks are little changed Tuesday as energy companies continue to rise with oil prices, but airlines fall as investors anticipate higher fuel costs.
Interest rates are rising as investors expect the Federal Reserve to raise its benchmark rate Wednesday, and high-dividend companies are declining.
A busy week for deals continued as Arby’s parent company agreed to buy Sonic and Michael Kors confirmed it will buy Versace.
KEEPING SCORE: The S&P 500 index fell 3 points, or 0.1 percent, to 2,916 as of 2:45 p.m. Eastern time. The Dow Jones Industrial Average lost 53 points, or 0.2 percent, to 26,508. The Nasdaq composite added 14 points, or 0.2 percent, to 8,007. The Russell 2000 index of smaller-company stocks gained 6 points, or 0.4 percent, to 1,711.
OIL BOOST: Oil prices continued to rise after a weekend meeting of OPEC and its allies ended without an increase in oil production. Oil prices have also climbed recently because Iran is exporting less oil after the U.S. withdrew from the international nuclear deal with Iran and announced more sanctions on the country.
Benchmark U.S. crude rose 0.3 percent to $72.28 a barrel in New York. Brent crude, the standard for international oil prices, rose 0.8 percent to $81.87 a barrel in London. Brent crude is at its highest price since November 2014.
ConocoPhillips rose 1.6 percent to $78.32 and Philips 66 added 1.7 percent to $115.43.
RATES: Bond prices kept falling, sending yields higher. The yield on the 10-year Treasury note rose to 3.10 percent from 3.07 percent. Investors bought bonds and sold shares of high-dividend companies. Among utilities, Southern Co. fell 2 percent to $42.94 and consumer goods maker Procter & Gamble lost 1.2 percent to $83.25.
The Federal Reserve began a two-day meeting Tuesday, and it’s almost certain the central bank will raise interest rates on Wednesday. That would be the third increase this year and the ninth since late 2015. It would take the benchmark rate to a range of 2 percent to 2.25 percent, with another increase expected this year and more to come in 2019.
Stocks usually do well when the Fed starts to raise interest rates because the higher rates reflect solid economic growth, which is linked to strong company profits. But as the rate increases continue, in line with the Fed’s goal of keeping inflation in check, the effect on stocks can become negative as economic growth slows.
MORE DEALS: Drive-in restaurant chain Sonic jumped 18.6 percent to $43.42 after it agreed to be bought by Inspire Brands, which also owns Arby’s and Buffalo Wild Wings. The purchase values Sonic at $43.50 a share, or $1.57 billion. Inspire Brands is controlled by the private equity firm Roark Capital.
XO Group, which runs the wedding marketplace The Knot, jumped 25.8 percent to $34.76 after it accepted a $907 million offer from two funds that own its competitor WeddingWire.
Michael Kors said it will pay more than $2 billion for Italian fashion house Gianni Versace as fashion companies continue to snap up luxury brands to add glamour to their businesses. Kors stock dropped 8.2 percent Monday following reports it would buy Versace, and rebounded 1.9 percent to $67.96 Tuesday.
Companies around the world have announced $3.26 trillion in deals this year, according to Dealogic, far above the $2.49 billion in deals that were struck over the first three quarters of 2017.
UNFRIENDED: The co-founders of Instagram are resigning from Facebook. Instagram has been a bright spot for Facebook because of its popularity with teens and young people, a group Facebook has had trouble keeping around. Facebook stock fell as much as 2.6 percent early on, but later recovered most of that loss. It was down 0.1 percent at $165.23 in afternoon trading.
CenturyLink sank 7.3 percent to $21.23 after it said its chief financial officer, Sunit Patel, is leaving. Patel worked for Level 3 Communications for 14 years before CenturyLink bought Level 3 last year. T-Mobile USA said he will be in charge of mergers and integration as it tries to combine with rival Sprint.
COMMODITIES: Wholesale gasoline added 0.6 percent to $2.07 gallon. Heating oil rose 0.8 percent to $2.31 a gallon. Natural gas rose 1.4 percent to $3.08 per 1,000 cubic feet.
Gold rose 0.1 percent to $1,205.10 an ounce. Silver gained 1.1 percent to $14.49 an ounce. Copper fell 0.4 percent to $2.82 a pound.
CURRENCIES: The dollar rose to 112.95 yen from 112.73 yen. The euro rose to $1.1766 from $1.1758.
OVERSEAS: The British FTSE 100 index rose 0.7 percent. The DAX in Germany added 0.2 percent and France’s CAC 40 gained 0.1 percent.
Tokyo’s Nikkei 225 gained 0.3 percent and the Sensex in India slipped 0.1 percent. Markets in Hong Kong and Seoul were closed for holidays.
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