NEW YORK: Wall Street’s main indexes lost some steam on Monday after the S&P 500 and the Nasdaq’s record-closing highs in the prior session, as investors paused at the start of a week packed with key jobs data and Fed Chair Jerome Powell’s congressional testimony.
Most megacap stocks dropped, with US Treasury yields on the rise. Apple fell 2.6% following a $2-billion EU antitrust fine for preventing Spotify and other music streaming services from informing users of payment options outside its App Store.
Outperforming peers, Nvidia jumped 3.5% after its market value closed above $2 trillion for the first time on Friday.
The Nasdaq kicked off March by hitting an intraday all-time high on Friday, also closing at its highest level for the second day, as the artificial intelligence-driven tech rally continues to steal the spotlight on Wall Street.
The S&P 500 has also been on a record-breaking rally, jumping over 21% in four straight months of gains through February. BofA Global Research lifted its year-end target for the benchmark index to 5,400, from 5,000, representing a 5% upside from current levels.
All eyes will be on monthly non-farm payrolls, JOLTS job openings and the ADP National Employment report, as well as the Fed’s “Beige Book” scheduled throughout the week for insights into the economy’s health.
The data comes at a time when investors have already pared expectations for how quickly and deeply the Fed will cut rates, as a stronger-than-expected economy risks reigniting inflation if policy eases too soon.
Powell is due to testify before lawmakers on Wednesday and Thursday, with analysts assuming the Fed chief to stay in wait-and-watch mode on policy after a recent escalation in inflation.
“The biggest short-term headwind (is) if we get any hawkish commentary from Powell or the jobs report indicates a relative strength in the jobs market, which would make it less likely for any shorter-term Fed cuts,” said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
Traders see a 69% chance of the first rate cut arriving in June and 88% odds of that in July, as per CME Group’s FedWatch tool.
At 11:39 a.m. ET, the Dow Jones Industrial Average was down 100.86 points, or 0.26%, at 38,986.52, the S&P 500 was down 3.91 points, or 0.08%, at 5,133.17, and the Nasdaq Composite was down 39.30 points, or 0.24%, at 16,235.64.
Out of the 11 major S&P 500 sector indexes, communication services led losses with a 1.6% drop.
Meanwhile, a rally in chip stocks pushed the Philadelphia SE Semiconductor index to a record high.
AI server maker Super Micro Computer and shoe maker Deckers Outdoor jumped 24.1% and 2.9% respectively ahead of their inclusion in the S&P 500 index.
Macy’s jumped 16.2% after real-estate-focused investing firm Arkhouse Management and Brigade Capital Management raised their offer for the department store chain.