Ankika Biswas and Johan M. Cherian
(Reuters) – The Nasdaq Composite and S&P 500 rose in choppy range trading on Monday as investors looked ahead to a string of upcoming news including earnings from big technology companies, a Federal Reserve decision to cut interest rates and key labor data.
Nvidia, Apple, Alphabet, Amazon.com, Microsoft and Meta Platforms were flat to up 1.2%, but still down from their highs of the day.
Tesla rose 5% to be the biggest gainer among large-cap stocks after Morgan Stanley added the electric-vehicle maker's shares to its “top picks” list of the U.S. auto industry.
Combined with a 4% rise in McDonald's shares after sales of its $5 meal kits, which launched in late June, beat expectations, Tesla's rise helped power the S&P 500 Consumer Goods & Services index's 0.9% gain, making it the top gainer among all sectors.
As of 11:59 a.m. ET, the Dow Jones Industrial Average was down 2.65 points, or 0.01%, to 40,586.69, the S&P 500 was up 13.41 points, or 0.25%, to 5,472.51 and the Nasdaq Composite was up 58.40 points, or 0.34%, to 17,416.28.
In a big test for the market, investors will be analysing earnings from Microsoft Corp, Meta, Apple Inc and Amazon.com Inc starting Tuesday to gauge whether the AI-driven stock rally has room to grow.
With technology giants driving Wall Street's record rally, investors are turning their attention to laggards, including small and mid-cap stocks that are expected to benefit from a low-interest rate environment.
But the small-cap Russell 2000 fell 0.8% after three straight weeks of gains.
The three major U.S. stock indexes rose more than 1% on Friday after recent data suggesting an easing in the jobs market and a positive U.S. inflation report stoked hopes of sooner monetary easing.
But a disappointing start to tech earnings led the S&P 500 and Nasdaq to post their biggest one-day declines since 2022 on Wednesday and end the week lower.
Expectations are growing that the Fed will signal a rate cut in September at its policy meeting on Wednesday, with a 90% chance of a 25 basis point cut, according to CME's FedWatch. Any hawkish comments at this stage could expose stocks to fresh selling pressure.
“If this language continues, it will get us closer to where we want to be, but we're not there yet,” said Phil Brancato, CEO of Ladenburg Thalmann Asset Management.
“The expectation is that the Fed will continue to pause cuts for now and then potentially set (rate cut expectations) for September, but in my opinion (rate cut expectations) are still in December.”
A series of employment reports, including nonfarm payrolls, will be scrutinized this week and may offer insight into some easing in the labor market.
Cryptocurrency stocks Coinbase Global, Riot Platforms and Marathon Digital also fell about 2% each after surging at the start of trading as bitcoin prices hit a seven-week high.
Shares of Abbott Laboratories fell 1.3 percent after a jury awarded the company $495 million in damages in a lawsuit alleging that its premature infant formula caused dangerous illnesses.
ON Semiconductor rose 13.3% after reporting second-quarter results that slightly beat expectations.
Declining issues outnumbered advancing ones on the NYSE by a 1.23-to-1 ratio, and on the Nasdaq by a 1.67-to-1 ratio.
The S&P index posted 29 new 52-week highs and one new low, while the Nasdaq posted 106 new highs and 51 new lows.
(Reporting by Ankika Biswas and Johan M. Cherian in Bengaluru; Editing by Pooja Desai)
