Stocks end mixed as investors eye Fed's next move

STORY: U.S. stocks ended mixed on Monday, as expectations that the Federal Reserve will become less aggressive with interest rate hikes were offset by lingering worries about inflation.

The Dow finished about a third of a percent lower. The S&P 500 closed barely changed, while the Nasdaq rose nearly two thirds of a percent.

Investors are awaiting a speech on Tuesday from Fed Chair Jerome Powell to clarify the fed’s policy outlook.

Zach Hill is head of portfolio management at Horizon Investments.

"The market clearly wants to trade this peak inflation narrative. We've been looking to do that, we did that three times last year and I think we're doing that again. And so we're a little cautious to step too directly, too strongly ahead of that because even if we do see a bit of a reversal in the disinflationary trends, well, you could just write that off as one month in the blip of an overall trend that's moving in the right direction. And so, we're watching that, obviously, and then looking to Powell's speech on Tuesday to see if he mentions any of the recent price action that we've seen across markets."

As for individual stocks, Tesla rose nearly 6% after the electric-vehicle maker indicated longer waiting times for some versions of the Model Y in China, suggesting recent price cuts could be stoking demand.

Shares of Amazon rose after Jefferies said it saw cost pressures easing for the e-commerce giant in the second half of the year.

Shares of both Macy's and Lululemon Athletica fell after both retailers issued disappointing holiday-quarter forecasts.

S&P 500 companies are about to kick off the fourth-quarter earnings season, with results from the big U.S. banks expected later this week.