In afternoon trading, the S&P 500 was down 0.2%, following its third losing week in the last 19. Despite this, it remains near its all-time high set on Thursday. This is largely due to expectations of interest rate cuts later this year and signs of a resilient economy.
The Dow Jones Industrial Average was down 0.1%, and the Nasdaq composite fell 0.2%.
The upcoming report on consumer-level prices, due on Tuesday, could show that inflation remained at 3.1% in February, according to economists’ forecasts.
A month ago, a higher-than-expected inflation report caused market volatility as it changed expectations for when the Federal Reserve would start cutting rates. Since then, stocks have risen and Treasury yields have eased on expectations of rate cuts.
Federal Reserve Chair Jerome Powell said last week that the Fed is “not far” from being confident enough about inflation to begin cutting rates. This could ease pressure on the economy and boost investment prices.
Traders widely expect the Fed to begin cutting rates in June.
The recent rally in U.S. stocks has been driven by expectations of easier interest rates, according to strategists at Morgan Stanley. Going forward, the rally may depend on earnings and fundamentals showing further improvement.
While most earnings reports for the season have been released, companies like Archer Daniels Midland and Ulta Beauty are among those reporting later this week.
Expectations of easier interest rates have also boosted the price of gold, which reached a record high. Gold rose 0.1% on Monday to $2,188.40 per ounce.
Bitcoin, often referred to as “digital gold,” also reached a record high, surpassing $72,000. This is a significant increase from its level below $17,000 at the beginning of last year.
Natural gas producer EQT was among the S&P 500’s biggest losers, falling 8.1%. It announced plans to acquire Equitrans Midstream in an all-stock deal valued at $35 billion. Equitrans Midstream rose 2.6%.
Nvidia, which had a significant drop on Friday, was swinging in trading. The stock is up more than 70% this year and has become the third-largest stock on Wall Street, giving its movements a significant impact on the S&P 500.
In other news, Reddit announced plans to raise up to nearly $750 million through a stock sale to investors on an exchange. The social media company expects its stock to trade under the “RDDT” ticker symbol.
In the bond market, yields were relatively steady, with the yield on the 10-year Treasury inching up to 4.09% from 4.08% late Friday.
Internationally, stock indexes were mostly lower in Europe and Asia. Japan’s Nikkei 225 fell 2.2%, but the government said its economy may have grown slightly in the last quarter of 2023, suggesting it may not be in a recession. Chinese stocks rose, with indexes climbing in Shanghai and Hong Kong. China’s National People’s Congress concluded with strong support for decisions made by the ruling Communist Party.
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