Wall Street stocks fell ahead of macro data

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Key points:

  • US stock market indices fell moderately due to a shift in focus from AI to upcoming economic data
  • This week traders are waiting for US macro data.
  • The PCE index could dampen enthusiasm if it shows that inflation continues unabated.

On Monday, US stock market benchmarks concluded the day with modest declines. Following a surge driven by excitement over artificial intelligence last week, attention has now turned to forthcoming economic data that might influence the timing of the anticipated interest rate reduction by the Federal Reserve.

The Dow Jones Industrial Average experienced a decrease of 62.30 points, equivalent to 0.16%, closing at 39,069.23. The S&P 500 saw a drop of 19.27 points, or 0.38%, settling at 5,069.53. Similarly, the Nasdaq Composite Index declined by 20.57 points, or 0.13%, ending the day at 15,976.25.

What data do traders expect?

The possibility of a rate cut at the Federal Reserve’s March meeting has been largely dismissed by the markets. The FedWatch Tool indicates a recent shift in expectations for a rate reduction, now anticipated in June instead of May, despite robust PPI and CPI data.

Upcoming reports on durable goods, consumer confidence, and manufacturing activity scheduled for later this week are being closely monitored. Investors and traders are adjusting their stock portfolios to ensure they are not excessively weighted or underweighted before the release of US macroeconomic data.

The release of the January Personal Consumption Expenditures (PCE) price index, a crucial inflation gauge for the Fed, on Thursday could temper recent optimism if the data suggests that price pressures are not easing as rapidly as hoped.

How company shares reacted

Out of the past 17 weeks, the S&P 500 has seen gains in 15, a feat observed only once in the last 50 years, specifically in 1989, as reported by Deutsche Bank.

The recent robust outlook from chip designer Nvidia has fueled the ongoing enthusiasm for artificial intelligence in the market. This surge contributed to setting new highs for the Dow Jones and S&P 500, while the Nasdaq came close to surpassing its November 2021 peak.

A 4.02% increase in Micron Technology shares played a role in mitigating the Nasdaq’s decline. Micron Technology has commenced mass production of high-bandwidth semiconductor memory modules for use in Nvidia’s latest artificial intelligence chips.

However, Google parent Alphabet faced a 4.44% decline after revealing plans to reintroduce its artificial intelligence tool in the coming weeks.

In terms of market performance, the S&P 500 registered 69 new 52-week highs and only one new low. Meanwhile, the Nasdaq reported 230 new highs and 92 new lows.


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