US stocks fell on Monday as Federal Reserve Chair Jerome Powell tempered expectations for an early interest rate drop, boosting the stakes for a busy week of corporate reports to keep the recent surge going.
The S&P 500 (^GSPC) concluded the day down 0.3%, indicating a minor reversal from the benchmark’s record-setting run. The Dow Jones Industrial Average (DJI) sank 0.7%, while the tech-heavy Nasdaq Composite (IXIC) dropped 0.2%.
Stocks fell following a wild week that finished with weekly gains thanks to a massive January employment report and solid high-profile earnings reports. Those good spirits took a hit when Powell, in a “60 Minutes” interview that aired Sunday, doubled down on his midweek warning that the central bank will walk slowly.
US stocks fell on Monday as Federal Reserve Chair Jerome Powell tempered expectations for an early interest rate drop, boosting the stakes for a busy week of corporate reports to keep the recent surge going.
The S&P 500 (^GSPC) concluded the day down 0.3%, indicating a minor reversal from the benchmark’s record-setting run. The Dow Jones Industrial Average (DJI) sank 0.7%, while the tech-heavy Nasdaq Composite (IXIC) dropped 0.2%.
Stocks fell following a wild week that finished with weekly gains thanks to a massive January employment report and solid high-profile earnings reports. Those good spirits took a hit when Powell, in a “60 Minutes” interview that aired Sunday, doubled down on his midweek warning that the central bank will walk slowly.
US equities fell on Monday as Fed Chair Jerome Powell dashed hopes for a rate drop in March.
The S&P 500 (^GSPC) concluded the day down 0.3%, following a record-setting run. The Dow Jones Industrial Average (DJI) sank 0.7%, while the tech-heavy Nasdaq Composite (IXIC) dropped 0.2%.
Materials, real estate, and consumer discretionary stocks all declined, while Healthcare and Technology companies rose somewhat.
Nvidia (NVDA) set a new record high on Monday, while Apple (AAPL) rose more than 1%.
Fed Chair Jerome Powell said in an interview with “60 Minutes” on Sunday that the Federal Reserve is unlikely to cut interest rates in March.
The yield on the 10-year Treasury (^TNX) increased.
Ten-year Treasury rates (^TNX) reached a session high of 1.77%, indicating a low possibility of a Fed rate decrease in March.
The markets had factored in the possibility of a rate drop, driving the main averages to record highs last week.
Fed Chair Jerome Powell said in a CBS interview on “60 Minutes” on Sunday that the Federal Reserve is unlikely to cut interest rates in March.
Mr. Powell noted that the “danger of moving too soon is that the job’s not quite done, and that the really good readings we’ve had for the last six months somehow turn out not to be a true indicator of where inflation’s heading.”
The S&P 500 Tech Sector ETF (XLK) rose around 0.2% on Monday, as Nvidia (NVDA) reached new highs.
The semiconductor giant’s stock rose around 4%, reaching an all-time high of $694.97, following a price target increase from Goldman Sachs analysts.
Apple (AAPL) shares rose on Monday as analysts weighed in on the tech giant’s unveiling of the Vision Pro headset, which Apple refers to as a spatial computer.
Materials (XLB), Real Estate (XLRE), and Consumer Discretionary (XLY) companies underperformed on Monday as the main averages fell.
Oil futures returned to positive territory on Monday after falling as much as 1% earlier in the day.
West Texas Intermediate (CL=F) recovered previous losses to stay around $72 per barrel, while Brent (BZ=F) futures rose above $78 per barrel.
Crude had been under pressure earlier on Monday after Fed Chair Jerome Powell said that the Federal Reserve was unlikely to decrease interest rates in March. Lower interest rates stimulate economic activity, which is generally positive for oil consumption.
Earlier in the day, the US pushed for a Middle East ceasefire, which maintained prices in the negative.
“Given the record production of US oil and no real supply losses in Middle East crude, most of the Geopolitical price premiums are being priced out,” he said.
Federal Reserve Chair Jerome Powell predicts that additional small banks will collapse or combine owing to commercial real estate issues, but believes the problem would eventually be “manageable.”
Powell’s comments during a “60 Minutes” interview were his first regarding the industry since a new wave of instability erupted in regional bank stocks.
According to Yahoo Finance’s David Hollerith, regional banks are more sensitive to commercial real estate since they have far greater exposure to those properties than bigger competitors.
Mid-morning trading on Monday saw stock losses increase, with the Dow Jones Industrial Average (DJI) lagging the most among the main averages, down almost 400 points, or more than 1%.
The S&P 500 (^GSPC) plunged up to 7%, reversing its record-setting run, while the tech-heavy Nasdaq (^IXIC) dipped over 1%.
McDonald’s (MCD) shares fell more than 3% after the fast food chain’s same-store sales underperformed Wall Street expectations.
Meta (META) shares fell more than 2% after rising 20% on Friday following the social networking company’s quarterly earnings.
Tesla shares (TSLA) fell more than 6% during trade.
In recent public appearances, Federal Reserve Chair Jerome Powell has made it apparent that the central bank is unlikely to decrease interest rates in March.
But stock market bulls are unconcerned about the turn back in rate cut forecasts. And this has more to do with Powell’s comments on solid economic statistics.
The Fed chair stated that a healthy labour market and economic growth are no longer the Fed’s primary priorities in determining whether to decrease interest rates.
“We’re not looking for a weaker labour market,” Powell stated on January 31. “We’re looking for inflation to continue to come down, as it has been coming down for the last six months.”