The S&P 500 and Nasdaq experienced gains on Monday as megacap stocks gained momentum. Investors are eagerly awaiting economic data and remarks from Federal Reserve policymakers to gain clarity on the future of interest rates. Apple, Tesla, Nvidia, and Alphabet all reversed their course and saw gains of 0.4% to 1.5%. Amazon.com also advanced 1.7% due to its plans to invest up to $4 billion in the startup Anthropic.
Last week, major growth stocks were negatively impacted by uncertainty surrounding the interest rate outlook. This included concerns about a potential rate hike by the end of the year and expectations for fewer cuts next year. As a result, the 10-year Treasury yield reached a 16-year high.
Earlier in the day, the S&P 500 and Nasdaq dropped to their lowest levels since June, while the Dow reached a two-month low. These indexes are also on track for their first quarterly declines of the year.
While energy stocks saw gains of over 1%, sectors such as utilities and real estate were negatively affected. Investors will be closely monitoring data on durable goods, the personal consumption expenditures (PCE) price index, second-quarter GDP, and remarks from Fed policymakers throughout the week.
Investors are hoping for any signs that the rate-tightening cycle is coming to an end and that a recession is not imminent. Concerns over rising oil prices, the strengthening dollar, and increasing interest rates could lead to additional weakness in the market.
Traders are currently betting that the benchmark rate will remain unchanged in November and December, with a rate cut being priced in for as early as March. However, these expectations could change based on economic data and Fed statements.
As of midday, the Dow Jones Industrial Average was slightly down, while the S&P 500 and Nasdaq were both up. Chicago Fed President Austan Goolsbee emphasized the need to bring inflation back to the 2% target, following warnings from other Fed policymakers about the possibility of further rate hikes.
The CBOE volatility index, also known as the “fear gauge,” reached its highest level in over a month. Footwear maker Nike and sportswear retailer Foot Locker saw declines after being downgraded by Jefferies.
U.S.-listed shares of Chinese firms also dipped ahead of a week-long holiday in China. Declining issues slightly outnumbered advancers on both the NYSE and Nasdaq.
Overall, the market is closely watching economic data and Fed statements for guidance on the future of interest rates and to assess the potential impact on various sectors and stocks.
