Chuck Mikolajczak
NEW YORK (Reuters) – The S&P 500 and Nasdaq Composite ended lower, weighed down by weakness in semiconductors and large-cap stocks ahead of earnings reports from big technology companies this week, while the Dow Jones Industrial Average only managed to post a modest gain.
Shares of Microsoft, seen by many as a leader in the artificial intelligence (AI) race, fell after the close ahead of the company’s quarterly earnings report.
Chipmaker Nvidia, seen as one of the biggest beneficiaries of potential AI growth and the second-best performer in the S&P 500 this year, fell sharply, weighing on other semiconductor stocks and the Philadelphia Semiconductor Index.
Other large-cap stocks scheduled to report earnings this week included Apple Inc., Amazon.com Inc. and Meta Platforms Inc. Shares of Amazon and Meta fell, while Apple shares rose slightly as concerns grew that the stock is overvalued.
“A lot of people are looking at artificial intelligence right now and saying this is great, but how do I make money from it?” said Steven Massocca, senior vice president at Wedbush Securities in San Francisco.
“Financially these companies are probably doing pretty well, but the question is how much are you paying for this? These are not cheap stocks, so you need to keep an eye on them and invest in them.”
In preliminary data, the S&P 500 fell 27.08 points, or 0.50%, to 5,436.46, the Nasdaq Composite fell 222.78 points, or 1.28%, to 17,147.42, and the Dow Jones Industrial Average rose 205.96 points, or 0.51%, to 40,745.89.
Small-cap and value stocks such as financials outperformed the broader market, continuing a recent rotation out of more expensive stocks as signs that inflation is easing cement market expectations that the Federal Reserve will cut interest rates this year.
The S&P 500 financials index surged, leading gains among the S&P’s 11 major sectors, while technology stocks were the worst performers.
Last week, disappointing results from Tesla Inc. and rising spending outlook from Alphabet Inc. sent large-cap stocks lower, sparking a broad-market selloff.
While the market sees a slight chance that the Federal Reserve will cut interest rates by at least 25 basis points at the end of its policy meeting on Wednesday, a rate cut at the Fed’s September meeting is fully priced in, according to CME’s FedWatch tool.
Several labor reports are scheduled for release this week, culminating with the government’s employment report on Friday. The Job Openings and Labor Movement survey released on Tuesday showed 8.18 million job openings in June, beating economists’ expectations of 8 million.
Among individual stocks, Procter & Gamble fell sharply after its fourth-quarter sales fell short of expectations.
Drugmaker Merck fell sharply after it cut its full-year profit forecast, while CrowdStrike fell after reports that Delta Air Lines had sought compensation from the company and Microsoft for a global cyber outage earlier this month.
Cybersecurity and cloud services company F5’s shares surged after the company forecast better-than-expected fourth-quarter results.
(This story has been refiled to correct S&P 500 link in seventh paragraph)
(Reporting by Chuck Mikolajczak and Richard Chang Editing)
