December 12, 2016 / 3:00 PM / 2 years ago

US STOCKS-Dow, S&P hit record highs as energy shares jump

* Oil prices jump as much as 6.5 pct on output cut pact

* Fed meets on Tuesday, Wednesday

* Defense stocks take a hit after Trump’s tweet

* Viacom, CBS down after Sumner Redstone withdraws merger approval

* Dow up 0.15 pct, S&P down 0.03 pct, Nasdaq down 0.43 pct (Updates to open)

By Tanya Agrawal

Dec 12 (Reuters) - The S&P 500 and the Dow hit fresh record highs on Monday, fueled by energy shares, while the Nasdaq was lower, a day ahead of the U.S. Fed’s two-day meeting.

Oil prices rose as much as 6.5 percent to an 18-month high after OPEC and some of its rivals reached their first deal since 2001 to jointly reduce output to try to tackle global oversupply and boost prices.

The S&P energy index was the top gainer with a 2.4 percent rise. Oil majors Exxon and Chevron were up about 2.3 percent and provided the biggest boost to the Dow.

President-elect Donald Trump’s expected agenda of economic stimulus and reduced taxes and regulations has fueled a market rally, with the benchmark S&P 500 rising 5.6 percent since Nov. 8 to Friday’s close.

The Dow has closed at record highs 14 times since the election.

“This market has gone up without taking a breather and will enter a cautious trading day as it awaits the Fed,” said Peter Cardillo, chief market economist at First Standard Financial in New York.

Investors are keeping a close watch on the U.S. Federal Reserve’s last meeting for the year, beginning Tuesday, with a statement from Fed Chair Janet Yellen on Wednesday. The central bank is widely expected to raise benchmark interest rates, with market participants looking for clues about the pace of future hikes.

At 9:41 a.m. ET (1441 GMT) the Dow Jones industrial average was up 29.82 points, or 0.15 percent, at 19,786.67, the S&P 500 was down 0.68 points, or 0.030095 percent, at 2,258.85 and the Nasdaq Composite was down 23.66 points, or 0.43 percent, at 5,420.84.

Seven of the 11 major S&P sectors were lower, with the industrials index’s 0.64 percent fall leading the decliners.

Viacom fell 6.4 percent to $36.14 after Sumner Redstone’s privately held National Amusements withdrew its merger proposal for CBS and Viacom, according to a source familiar with the situation. CBS was down 3.5 percent.

Lockheed Martin was down 4.2 percent at $248.75 after Donald Trump tweeted that the company’s F-35 program and costs were “out of control”. Other defense stocks, such as General Dynamics, Raytheon, and Northrop Grumman , were down between 3.4-6.1 percent.

Ophthotech slumped 84.3 percent to $6.06 after Novartis said a combination of its eye drug along with the company’s did not produce better outcomes.

Declining issues outnumbered advancers on the NYSE by 1,550 to 1,133. On the Nasdaq, 1,495 issues fell and 916 advanced.

The S&P 500 index showed 46 new 52-week highs and no new lows, while the Nasdaq recorded 87 new highs and seven new lows. (Reporting by Tanya Agrawal; Editing by Sriraj Kalluvila)

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