US: Microsoft drags Wall St; Fed meet awaited

[NEW YORK] Wall Street opened lower for the third straight trading day, pulled down by Microsoft, ahead of the Federal Reserve's policy meeting starting Tuesday.

Microsoft was the biggest drag on all three major indexes after the software company agreed to buy LinkedIn for US$26.2 billion. Microsoft stock fell 4.5 per cent to US$49.18 while LinkedIn jumped 47 per cent to US$193.13.

Nine of the 10 major S&P sectors were lower with the information technology index's 0.62 per cent fall leading the decliners. Facebook was down 1.4 per cent at US$114.99 after CNBC said Citron Research was short on the stock.

The US Federal Reserve Open Market Committee (FOMC) will meet on Tuesday and Wednesday to decide when to raise interest rates for the second time in nearly a decade.

Fed Chair Janet Yellen, who had been dropping hints of a rate hike most of last month, was more vague last week on its timing after dismal May hiring data and a possible Brexit raised concerns about the strength of the economy.

Traders have reduced the odds of a hike this month to 1 per cent and the one in July to 33 per cent, according to CME Group's FedWatch tool.

Banks, which stand to benefit most if the Fed raises interest rates, were lower at the open on Monday. Bank of America Citigroup and JPMorgan were off about 1 per cent.

At 9:44 am ET (1344 GMT), the Dow Jones Industrial Average was down 53.07 points, or 0.3 per cent, at 17,812.27.

The S&P 500 was down 5.78 points, or 0.28 per cent, at 2,090.29 and the Nasdaq Composite was down 22.03 points, or 0.45 per cent, at 4,872.52.

"There is nothing much the Fed can do after the May employment data and the non-manufacturing data came in very very poor. So they'll try and spin it as 'We just have to wait and see how things develop'," said John Brady, managing director of institutional sales at RJ Brien & Associates in Chicago.

The impending vote to determine if Britain will remain in the European Union added to the uncertainty.

Oil prices started the week in the red, falling over 1 per cent after traders booked profits and the dollar's strength increased.

Gold prices hit their highest since mid-May and the yen surged to a three-year high.

An attack in Orlando, Florida, where a gunman killed over 50 people at a nightclub added to the dour mood. Shares of gun makers Smith & Wesson and Sturm Ruger rose about 9 per cent.

Declining issues outnumbered advancing ones on the NYSE by 1,808 to 979. On the Nasdaq, 1,458 issues fell and 921 advanced.

The S&P 500 index showed 19 new 52-week highs and one new low, while the Nasdaq recorded 17 new highs and 27 new lows.

REUTERS