Stocks were mixed in choppy trading Monday as the energy sector sold off and investors grew nervous ahead of the Federal Reserve's meeting on Tuesday.
The S&P 500 was down 0.18%, the Dow Jones Industrial Average fell 0.14%, and the Nasdaq added 0.05%.
Crude oil prices closed at their lowest level since late August as fears over the Chinese economy continued to pressure commodities. The People's Bank of China's decision on Friday to cut rates fed concerns that the world's second-largest economy was suffering slower growth than reported. West Texas Intermediate was down 1.4% to $43.98 a barrel.
A number of heavy-hitters in the oil patch are due to report this week, including Exxon Mobil (XOM) - Get Exxon Mobil Corporation Report , Chevron (CVX) - Get Chevron Corporation Report , and Phillips66 (PSX) - Get Phillips 66 Report . Analysts have already priced in a steep drop in sales as oil prices continue to tumble.
The energy sector was the worst performer on markets Monday. Industry giants such as Royal Dutch Shell (RDS.A) , PetroChina (PTR) - Get PetroChina Company Limited Sponsored ADR Report , Total (TOT) - Get Total SA Sponsored ADR Class B Report , BP (BP) - Get BP p.l.c. Sponsored ADR Report , and Schlumberger (SLB) - Get Schlumberger NV Report were lower, while the Energy Select Sector SPDR ETF (XLE) - Get Energy Select Sector SPDR Fund Report slid 2.1%.
The Fed will convene for a two-day meeting on Tuesday with an announcement on interest rates due for Wednesday afternoon. While few expect the Fed to hike rates in the coming week, the key question is whether December is now off the table.
"Given the recent renewed weakness in domestic employment, as well as nonexistent inflation, the hope of raising rates by the end of the year is likely to remain just that -- wishful thinking," said Lindsey Piegza, chief economist at Stifel Fixed Income.
The U.S. housing market showed a rare spot of weakness in September with new home sales falling 11.5%, their lowest rate in 10 months. The gauge fell to a rate of 468,000 over the month, driven by a 62% decline in the Northeast.
Intercontinental Exchange (ICE) - Get Intercontinental Exchange, Inc. (ICE) Report fell 1% after agreeing to buy Interactive Data Corp. from private-equity firms Silver Lake and Warburg Pincus for $5.2 billion. The financial services company had previously considered filing for an initial public offering.
Auto stocks took focus after General Motors (GM) - Get General Motors Company (GM) Report reached a tentative deal with the United Auto Workers union to avoid a strike. Local union leaders will vote on the four-year contract on Wednesday. The agreement covers 52,600 U.S. auto workers at 62 of the automaker's facilities.
Tesla (TSLA) - Get Tesla Inc Report climbed nearly 3% after reporting its strongest quarterly results in China over the three months ended September. The automaker sold 1,345 units in the region over the quarter. CEO Elon Musk recently said that sales in China could match the U.S. in as few as five years.
Toyota (TM) - Get Toyota Motor Corp. Sponsored ADR Report outpaced all other car companies to sell the most units over the first nine months of the year. The Japanese automaker sold 7.49 million models over the period, better than Volkswagen's (VLKAY) 7.43 million and General Motors' 7.2 million.
Valeant Pharmaceuticals (VRX) defended itself against recent allegations of accounting fraud in a conference call Monday morning. Short-seller Citron Research released a report last week that alleged the drugmaker had funneled sales through its subsidiary in order to beef up its top-line. Valeant reaffirmed its outlook for the fourth quarter and full-year 2016.
Valeant also called for a Securities Exchange Commission investigation into Citron Research. "He intentionally designed the report to frighten our shareholders to drive down the price of our stock so he could make money for his short-selling," Valeant CEO Mike Pearson said during the call. The stock fell 3.4%.
Duke Energy (DUK) - Get Duke Energy Corporation (DUK) Report shares fell 2.1% after the company agreed to acquire Piedmont Natural Gas (PNY) for $4.9 billion, approximately a 40% premium to Piedmont's closing price on Friday. The all-cash deal will see Duke assume around $1.8 billion of Piedmont's existing debt. The deal is expected to close by the end of 2016. Piedmont shares rose 37.3% on Monday to $57.95.
Pep Boys (PBY) - Get Prospect Capital Corporation 6.25 % Notes 2018-15.06.28 Report rocketed more than 23% higher after agreeing to be acquired by Bridgestone for $835 million. The all-cash deal represents a 23% premium to Pep Boys' closing price on Friday.
PayPal (PYPL) - Get PayPal Holdings Inc Report climbed almost 4% after Goldman Sachs added the stock to its Conviction Buy list. Analysts said the online-payments company has strong growth potential and is attractively valued.