Nasdaq Slips as Dow and S&P 500 Rise Ahead of U.S. Inflation Reports
The Nasdaq slipped on Monday afternoon after briefly surpassing its record closing high from November 2021, but the Dow and the S&P 500 rose modestly ahead of two U.S. inflation reports this week that could influence Federal Reserve policy. Nvidia overtook Amazon.com in value, but Nasdaq lost some steam after nearing its all-time intra-day high of 16,212.229.
Over the past four months, megacaps with greater exposure to artificial intelligence have spearheaded a bull market on Wall Street as other stocks also rose on hopes of imminent rate cuts and an upbeat outlook from businesses. The benchmark S&P 500 remained above the 5,000-point level it crossed on Friday and was trading at record high levels along with the blue-chip Dow. Leading the charge, Nvidia surpassed Amazon.com in market capitalization, as the euphoria around AI catapulted the chipmaker to the fourth-most valuable U.S. company. Nvidia was up 0.1%, while Amazon dipped 1%.
“Earnings are coming in better than expected, the forecast for inflation continues to decline and the Fed is still likely to lower rates, Wall Street is having a hard time finding something to go wrong with the stock market rally,” said Sam Stovall, chief investment strategist at CFRA Research.
Traders awaited January’s Consumer Price Index (CPI) and Producer Price Index (PPI) this week to gauge prospects for interest rate cuts this year. This week the market also gets data on industrial production, retail sales, and preliminary University of Michigan consumer sentiment.
“With data reflecting a robust economy, central bankers have shown less eagerness for early rate cuts. The odds for at least a 25-basis-point rate reduction in May have dropped to 52.2%, from over 95% at the start of 2024,” as per the CME FedWatch Tool.
At 1:52 p.m., the S&P 500 gained 6.01 points, or 0.12%, to 5,032.62 points, while the Nasdaq lost 12.13 points, or 0.08%, to 15,978.54. The Dow rose 196.04 points, or 0.51%, to 38,867.73. The small caps index also surged 1.8%.
“Investors are rotating into those areas that have not kept pace with the broader market because that’s possibly where there is greater value,” said Stovall. “Today could be sort of a bottom fishing day for the market.”
Among other movers, Diamondback Energy jumped 9.2%, helping energy to top the 11 S&P 500 sectors with a 1.16% gain. Diamondback announced a $26-billion deal to buy the largest privately held oil and gas producer in the Permian basin, Endeavor Energy Partners.
Joby Aviation gained 6.6% as the electric-powered aircraft maker signed an agreement to launch air taxi services in the United Arab Emirates by early 2026. Advancing issues outnumbered decliners by a 4.3-to-1 ratio on the NYSE and by a 2.32-to-1 ratio on the Nasdaq.
Analyst comment
Neutral news. The Nasdaq slipped while the Dow and S&P 500 rose modestly ahead of U.S. inflation reports. Traders are awaiting data on inflation, industrial production, retail sales, and consumer sentiment. The market is uncertain about the possibility of interest rate cuts. Some sectors, like energy, are performing well. The market may experience some volatility as investors seek greater value.
