The Dow and S&P 500 fell on Monday, the first session following their highest weekly percentage gains this year, as investors assessed the Federal Reserve's interest rate path ahead of critical inflation data later in this holiday-shortened week. Last week, the Fed maintained its guidance for three interest-rate reduction this year, and the S&P 500, Dow, and Nasdaq had their greatest weekly percentage increases since mid-January.
Chicago Fed President Austan Goolsbee said he had penciled in three rate cuts for this year on Monday, while Fed Governor Lisa Cook suggested the central bank should approach cautiously when decreasing rates. "It's a breather, the market has held really well, so people are waiting for that pullback," said Chatham, New Jersey's Themis Trading partner, co-founder, and co-head of stock trading Joe Saluzzi.
"The Fed gave the all-clear for now; it's fascinating. They're not cutting anything yet, just delaying it, and the market is fine with that. They're conserving the ammunition for when they need them." The Dow Jones Industrial Average (.DJI) slid 162.13 points, or 0.41%, to 39,313.77, the S&P 500 (.SPX) lost 15.97 points, or 0.31%, to 5,218.21, and the Nasdaq Composite (.IXIC) fell 44.35 points, or 0.27%, to 16,384.47.After mortgage rates rose in February, new U.S. single-family home sales declined unexpectedly. A severe shortage of pre-owned homes persisted.
Nvidia and Micron Technology gains supported the Nasdaq for most of the session before it fell late. To close at $117.04, Nvidia increased 0.76% and Micron Technology rose 6.28%. After a weekend report suggested China had developed instructions to phase out U.S. microprocessors from government personal computers and servers, semiconductor shares were shaky.
After alternating gains and losses, the Philadelphia Semiconductor Index (.SOX) fell 0.34%. AMD fell 0.57% and Intel 1.74%. According to CME'sFedWatch Tool, opens new tab, markets currently expect a June Fed rate drop of at least 25 basis points (bps) up from 54.7% a week earlier. The Fed's favorite inflation barometer, the Personal Consumption Expenditures (PCE) price index, is expected on Friday, when U.S. markets are closed for Good Friday.
A good reading may alter market expectations for a rate cut. Boeing (BA.N) climbed 1.36% after announcing a management reorganization and CEO Dave Calhoun's departure in 2024. But the planemaker ended session highs. Disney (DIS.N), opens new tab rose 3.01% as the Dow's strongest performance after Barclays upgraded it to "overweight" from "equal weight".
On the NYSE, falling issues outnumbered gaining ones 1.4-to-1. Declining Nasdaq issues outnumbered advancing ones 1.4-to-1. S&P 500 had 31 new 52-week highs and 2 new lows; Nasdaq had 113 and 110.
U.S. exchanges traded 9.67 billion shares, compared to 12.27 billion for the full session during the past 20 trading days.
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