Investors in the Nasdaq and the S&P 500 witnessed choppy and range-bound trading on Monday as they awaited several upcoming triggers, such as Big Tech earnings, a Federal Reserve policy decision on interest-rate cuts, and key labor data. Stocks of companies like Nvidia, Apple, Alphabet, Amazon.com, Microsoft, and Meta Platforms saw marginal gains ranging from flat to 1.2%. Tesla emerged as the top gainer among megacaps, up 5% after Morgan Stanley added the EV maker’s stock to its “top pick” U.S. autos’ list. McDonald’s also saw a 4% increase after reporting strong sales following the launch of its $5-meal deal. These gains helped the S&P 500 Consumer Discretionary index rise by 0.9%, leading sectoral gainers. The Dow Jones Industrial Average was slightly down, but the S&P 500 and Nasdaq Composite were up by 0.25% and 0.34%, respectively.
Investors are eagerly awaiting earnings reports from big tech companies such as Microsoft, Meta, Apple, and Amazon.com, starting on Tuesday. The AI-led rally in equities has been driven by technology giants, leading investors to shift focus towards less prominent companies like mid and small caps, which are expected to benefit from a low-interest-rate environment. Despite this trend, the small-cap Russell 2000 experienced a decline of 0.8% after three consecutive weeks of gains. Last week, the major U.S. stock indexes surged more than 1% following positive reports on U.S. inflation and a loosening jobs market. However, disappointing tech earnings led to a decline, resulting in the S&P 500 and the Nasdaq ending the week lower after registering their steepest one-day slide since 2022.
The Federal Reserve’s policy verdict on potential rate cuts in September is highly anticipated, with a 90% chance of a 25-basis-point reduction, according to CME’s FedWatch. Investors will closely watch for any hawkish commentary from the Fed, as this could trigger renewed selling pressures in the equity market. Employment reports, including the Non-farm Payrolls, will be closely scrutinized this week to gain insight into the labor market’s condition. Crypto stocks like Coinbase Global, Riot Platforms, and Marathon Digital experienced a decline of around 2% each after an initial surge in early trading. Healthcare company Abbott Laboratories saw a 1.3% drop after being ordered to pay $495 million in damages for a formula that caused illness in premature infants. Onsemi, on the other hand, jumped 13.3% after beating second-quarter results.
The New York Stock Exchange saw a higher number of declining issues compared to advancers, with a ratio of 1.23-to-1 on the NYSE and 1.67-to-1 on the Nasdaq. The S&P index recorded 29 new 52-week highs and one new low, while the Nasdaq recorded 106 new highs and 51 new lows. Overall, investors are closely monitoring upcoming triggers like earnings reports, the Fed’s policy decision, and labor data to determine the future direction of the market. As key tech companies present their financial performance, the outcome will likely have a significant impact on the overall trajectory of the stock market, especially in the context of recent economic developments and investor sentiments.
