Wall Street’s main indexes dipped slightly on Monday as investors anticipated new economic data and upcoming comments from Federal Reserve officials throughout the week to gain more clarity on monetary policy. Despite the overall decline, megacap stocks like Apple and Microsoft saw gains of 0.3% and 0.9%, respectively, which helped limit the losses. Nvidia, a leader in AI chips, advanced by 1% to reach a fresh record high.
The semiconductor sector also saw positive movement, with the Philadelphia SE Semiconductor index hitting an all-time high. Broadcom and U.S.-listed shares of Taiwan Semiconductor Manufacturing Co both increased by around 3%, while Micron Technology rose by 2% following price-target raises by brokerages. Autodesk jumped 4.5% after activist investor Starboard Value acquired a stake worth approximately $500 million in the software maker. Technology was the top performer among the 11 S&P 500 sector indexes.
Last Friday, the blue-chip Dow was the only major index to post weekly declines, while the Nasdaq achieved its fifth consecutive record closing high. The S&P 500 hit multiple all-time peaks in the previous week. However, there are concerns about the sustainability of the equity rally, as most of Wall Street’s gains this year have been driven by a select few growth and technology stocks.
Daniela Hathorn, senior market analyst at Capital.com, noted that there is currently no strong appetite for selling due to the perception that momentum will continue and stocks will keep winning. She cautioned, however, that since the rally has been driven by a few stocks, a pullback could be more pronounced.
Despite these concerns, Goldman Sachs raised its 2024 year-end target for the S&P 500 Index to 5,600 from 5,200, indicating a potential 3.2% upside from current levels. Investors are also closely monitoring upcoming comments from the New York Fed’s John Williams, Philadelphia Fed’s Patrick Harker, and Fed Board Governor Lisa Cook.
Recent data showed the New York Fed’s Empire State Current Business Conditions index slipped less than expected, while the index of prices paid softened slightly. Key economic data releases later in the week include May retail sales, industrial production, housing starts, and S&P flash PMI data.
The Federal Reserve’s recent hawkish projections have contrasted with several data points indicating growing economic weakness. The Fed reduced their projections for rate cuts in 2024 from three to one, although markets still anticipate about two 25-basis-point cuts this year. The CME FedWatch tool indicates that easing is expected to begin at the September meeting.
At 9:47 a.m. ET, the Dow Jones Industrial Average was down 91.66 points, or 0.24%, at 38,497.50, the S&P 500 was down 5.63 points, or 0.10%, at 5,425.97, and the Nasdaq Composite was down 17.42 points, or 0.10%, at 17,671.46. The trading week will be shorter as markets will be closed on Wednesday.
Declining issues outnumbered advancers with a 1.73-to-1 ratio on the NYSE and a 1.55-to-1 ratio on the Nasdaq. The S&P index recorded 13 new 52-week highs and four new lows, while the Nasdaq recorded 20 new highs and 82 new lows.
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