On Monday, the S&P 500 experienced a marginal decline, with investors taking a breather in anticipation of upcoming economic data and Federal Reserve Chair Jerome Powell’s testimony before Congress. Despite a positive trend over the past nine weeks, investors are currently scrutinizing vital economic indicators, including quarterly assessments of service sector activity and non-farm payrolls. Their focus is on determining whether there is additional scope for the Federal Reserve to implement interest rate cuts.
The market’s late-year rally has been driven by hopes that inflation is cooling and that the Fed can lower interest rates, which have remained near their highest level in over a decade. However, investors have become more cautious since recent reports showed that prices are rising faster than expected.
Investors hope the Fed’s two days of congressional testimony this week will shed more light on the timing of rate cuts. “We think the market is still expecting a rate cut, but it is likely to be delayed until we have more evidence of decelerating inflation,” Wells Fargo’s senior investment strategist Scott Wren said in a note.
Investors also eyed results from several S&P 500 companies due out this week. PayPal (PYPL.O) fell more than 5% after reporting earnings that beat expectations but offered a forward profit forecast below analysts’ estimates. New York Community Bancorp (NYCB.O) also tumbled after it reported weaker third-quarter profit, and Moody’s cut its credit rating to junk status.
In the tech sector, shares of Apple (AAPL.O) slumped 2.5% after the company was hit with a $2-billion EU antitrust fine for preventing Spotify (SPOT.N) and other music streaming services from informing users of payment options outside its App Store. Also, investors remained concerned about slowing growth in China and the potential impact on global economic growth.
Other higher stocks included shoe maker Deckers Outdoor (DECK.O), which rose 2.5%, and AI server maker Super Micro Computer (SMCI.O), which added 23.3% after more than tripling this year on a frenzy for the technology. Insurance giant Geico (GICO.N), which Warren Buffett’s Berkshire Hathaway owns, gained 8.5% after it said it would adopt a competitor’s use of telematics to help reduce insurance claims. Geico’s rival, Progressive (PGR.N), has been using telematics to track customers’ driving habits and price their policies better.
