Dow closes at record high, but S&P 500 and Nasdaq fall on tech stocks’ weakness

The Dow Jones Industrial Average (^DJI) closed at a record high on Monday, while the S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) fell, and shares of NVIDIA (NVDA) fell about 2% ahead of the release of quarterly earnings later this week.

The Dow Jones Industrial Average rose 0.1% to close at 41,240.52, led by gains in Materials (XLP), Utilities (XLU), and Energy (XLE).

Technology (XLK) stocks slumped during the session, with Broadcom (AVGO) and electric vehicle maker Tesla (TSLA) falling more than 3%, dragging down the Nasdaq and S&P 500.

PDD Holdings (PDD), also known as Pinduoduo and the parent company of e-commerce platform Temu, fell 28% after reporting disappointing second-quarter results.

Stocks gave up gains on Friday after Fed Chairman Jerome Powell suggested policymakers were ready to reverse course and cut interest rates at the next FOMC meeting in September.

Now that Fed Chairman Jerome Powell has opened the door to a rate-cutting cycle, economists are reasoning that how much the Fed cuts rates in 2024 will depend in large part on how well the labor market holds up.

Many economists argue that if the August employment report, due on September 6, confirms that July’s data may have exaggerated the labor market’s weakness, the Fed will start with a 25 basis point rate cut.

In other words, the continued signs of a weakening economy mean the Fed doesn’t need to cut interest rates — and for many strategists, that remains a key thing for investors to focus on when considering a Fed rate cut.

When the Fed cuts rates because the economy needs help, it’s not good for stocks. As long as the economy remains strong, the S&P 500 has risen at least 11% a year after the first Fed rate cut, dating back to 1989, according to a survey by Truist co-chief investment officer Keith Lerner sent to clients on Monday.

But when the US economy fell into a recession over the next 12 months, the S&P 500 fell by at least 14% over the following year, according to Learner’s research.

This is a clear indication of today’s environment: if a major downturn in the labor market forces the Fed to cut rates more aggressively, history shows that this is not a welcome sign for the stock market.

Shares of semiconductor giant Nvidia (NVDA) fell more than 2% on Monday as investors awaited the company’s quarterly earnings report, due after the close of trading on Wednesday.

Dan Howley of Yahoo Finance reports:

NVIDIA’s earnings release, the most anticipated result of the quarter, will have ripple effects across the technology industry as investors look for signs that AI deals will continue to dominate market conversations in the second half of the year.

Nvidia shares are up more than 163% year to date and up 60% over the past six months. Shares of rival AMD (AMD) are up 9% year to date and down about 14% over the past six months.

Intel (INTC) shares have fallen 57% since the beginning of the year and 53% in the past six months as the company continues to struggle amid a massive restructuring effort.

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David Hollerith of Yahoo Finance reports:

Investors are betting that a change of policy from Federal Reserve Chairman Jerome Powell will boost U.S. bank stocks as low interest rates are expected to bring much-needed relief to some struggling financial institutions.

The bet helped push the index tracking mid-sized regional banks (^KRX) up 5% on Friday, the index’s biggest one-day gain in all of 2024. The index maintained that gain on Monday.

The big move came after Powell sent a safety signal to markets by saying “it’s time to adjust policy,” preparing to cut interest rates for the first time in more than four years.

The index tracking the broad banking sector (^BKX) is up more than 18% this year, in line with the performance of the S&P 500 (^GSPC).

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Oil prices surged on Monday following the halt in Libya’s oil production and rising tensions in the Middle East.

West Texas Intermediate (CL=F) rose 3% to above $77 a barrel, while the international benchmark Brent crude (BZ=F) rose more than 2% to above $80 a barrel.

Israel carried out airstrikes at the weekend against Tehran-backed Hezbollah rocket launch sites in Lebanon, raising fears of a wider conflict in the region involving Iran.

“Escalating tensions could provoke a military response from Iran, which could slow global oil movements,” Dennis Kistler, senior vice president at BOK Financial, wrote in a client note on Monday.

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Gold prices neared a record high on Monday as investors flocked to the precious metal on rising geopolitical tensions and expectations of a Federal Reserve interest rate cut in September.

Gold futures for December delivery (GC=F) rose above $2,552 an ounce.

Precious metals have risen more than 23% since the start of the year, making them one of the best-performing commodities this year.

Tech stocks fell on Monday, dragging down the S&P 500 (^GSPC) and Nasdaq Composite Index (^IXIC).

Nvidia (NVDA) shares were down more than 1.5% by 12:30 p.m. ET, though they had retreated from the session low. Semiconductor maker Broadcom (AVGO) was down more than 3%, and electric-vehicle maker Tesla (TSLA) was down more than 2%.

Meanwhile, materials (XLP), utilities (XLU) and energy (XLE) stocks rose, helping to lift the Dow Jones Industrial Average (^DJI).

Pras Subramanian of Yahoo Finance reports:

CARMEL, Calif. — McLaren CEO Michael Leiters believes the British luxury supercar maker can achieve the same kind of success as Ferrari, but in a slightly different way.

“We have one element to our brand, and that’s belonging,” Reiters, who has been at the helm of McLaren for two years after eight years as Ferrari’s chief technical officer, said in an interview with Yahoo Finance during Monterey Car Week. “We want talent here. … We’ll talk to anybody. There’s no arrogance.”

This could be interpreted as a not-so-veiled criticism of Ferrari, given that the Italian luxury sports car maker is notorious for secrecy, invitation-only events and only selling new cars to existing or preferred customers.

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Markets were split on Monday as the Dow Jones Industrial Average (^DJI) rose more than 200 points to hit a new intraday high.

The S&P 500 (^GSPC) lost 0.3%, erasing the previous day’s gains, while the tech-heavy Nasdaq Composite Index (^IXIC) fell more than 1% on a drop in shares of Nvidia (NVDA).

The AI ​​chip giant is scheduled to release its quarterly earnings after the market closes this Wednesday.

EV giant Tesla (TSLA) also fell more than 3%, weighing on the S&P 500 and Nasdaq.

The Dow Jones Industrial Average (^DJI) rose more than 200 points (0.5%) on Monday morning to hit an intraday record high of 41,394.10.

Energy and materials led gains on Monday, while technology stocks struggled, with the tech-heavy Nasdaq Composite Index (^IXIC) down 0.7% and the S&P 500 (^GSPC) slightly lower.

The S&P 500 (^GSPC) rose 0.3% on Monday, inching closer to its July record high. The index is less than 0.5% away from its July 16 all-time high of 5,667.20.

The Dow Jones Industrial Average (^DJI) rose 0.3% on Monday, while the tech-heavy Nasdaq Composite Index (^IXIC) was just above flat after opening slightly lower.

Stocks were mixed on Monday as investors’ attention shifted to a busy week led by Nvidia’s (NVDA) earnings report.

The S&P 500 (^GSPC) rose about 0.1%, the Dow Jones Industrial Average (^DJI) added about 0.2%, and the tech-heavy Nasdaq Composite Index (^IXIC) was just below flat after the major stock indexes rose on Friday.

The focus this week will undoubtedly be on Nvidia’s performance. The AI ​​chip giant has led the market this year, so a lot is riding on it. Nvidia shares were little changed Monday morning after rising 4.5% on Friday.

Stocks approached new record highs on Friday after Federal Reserve Chairman Jerome Powell made it clear the central bank was ready to start cutting interest rates as soon as September. The benchmark S&P 500 index is down less than 1% from its all-time closing high hit in July.