Tough start for Wall Street this morning

December 7, 2015 09:40 AM

U.S. stocks looked set to start the week little changed on Monday after a strong jobs report last week underscored U.S. economic strength but falling oil prices could be a drag.

The solid November employment report showed that the economy was strong enough to absorb an interest rate hike, which is widely expected to be raised when the Federal Reserve meets on Dec. 15-16.

The report came a day after Fed Chair Janet Yellen struck an upbeat note on the economy when she testified before lawmakers, describing how it had largely met the criteria for a rate hike.

Brent crude prices was just a whisker away from their 2015 lows on Monday after OPEC's meeting ended last week without a reference to its output ceiling.

"At this moment, a rate hike is a foregone conclusion and if the Fed misses the opportunity to raise again next week, it will reintroduce uncertainties in the market," said Peter Cardillo, chief market economist at First Standard Financial in New York.

However, Cardillo said falling oil prices could cap gains in the market as investors resort to profit taking.

S&P 500 e-minis were down 0.75 points, or 0.04 %, with 146,449 contracts traded at 8:31 a.m. ET. Nasdaq 100 e-minis were up 2.5 points, or 0.05 %, on volume of 22,182 contracts. Dow e-minis were down 10 points, or 0.06 %, with 18,947 contracts changing hands.

Atlanta Fed President Dennis Lockhart told CNBC in an interview on Monday that the economic conditions are satisfactory and the market is well-prepared for a hike.

Lockhart is a voting member of the central bank's policy setting committee.

Traders see a 79 % chance that the central bank will increase rates for the first time in nearly a decade, according to the CME Group's FedWatch.

St. Louis Federal Reserve President James Bullard is scheduled to speak on the U.S. economy at 12:30 p.m. ET.

The Fed is scheduled to report the outstanding credit extended to American consumers at 3:30 p.m. ET. The figure for October is expected to have fallen to $20.00 billion from $28.92 billion in September.

Keurig Green Mountain's shares soared 75 % to $90.74 in premarket trading after the coffee-pod maker agreed to be bought by an investor group led by Germany's JAB Holding for about $13.9 billion.

Chipotle Mexican Grill fell 8.9 % to $510.90, after the popular burrito chain warned that sales at established restaurants would fall in the fourth quarter due to the impact of an E. coli outbreak.

Pep Boys-Manny, Moe & Jack were up 7.4 % at $16.85 after billionaire investor Carl Icahn reported on Friday that he now owns 12.12 % of the auto parts company.

Alcoa was up 1.2 % at $9.45 after a Barron's article said the company's split could boost shares by 50 %.

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Tanya Agrawal, Reuters