U.S. stocks were mixed on Monday, with the S&P 500 inching closer to its record high while the Dow Jones Industrial Average rose 1%. The Nasdaq composite, however, was down 0.5%, partly due to a 5.5% drop in Nvidia’s stock, which had been on a streak of rapid growth. The chip company has seen significant demand for its products in artificial intelligence applications, but concerns about a stock market bubble and high investor expectations have weighed on its performance.
Oil and gas companies led a broad-based rally in the market, with nearly 85% of S&P 500 stocks rising. Exxon Mobil and SLB saw gains as oil prices remained high. Another major development was RXO’s agreement to buy Coyote Logistics UPS freight brokerage business for nearly $1.03 billion, making it the third-largest intermediated transportation provider in North America. Under Armour also saw a positive turn in its stock after agreeing to pay $434 million to resolve shareholder charges related to sales and accounting practices.
In the bond market, Treasury yields held steady, with the 10-year yield falling slightly. Hopes of slowing inflation leading to a potential interest rate cut by the Federal Reserve have been a driving force behind market movements. UBS economists believe that the US economy may be slowing more than expected, with growth projected to drop below 2% in the first half of 2024.
Investors are eyeing potential rate cuts by the Federal Reserve to alleviate upward inflation pressures. Goldman Sachs economist David Mericle suggested a rate cut could come as early as September if inflation reports align with expectations. The challenge for the Federal Reserve lies in timing the rate cut accurately, as acting too soon or too late could have adverse effects on the economy.
Meanwhile, foreign stock markets experienced varied movements, with European indices rising after declines in Asia. The global market outlook remains uncertain amid ongoing economic challenges and shifting investor sentiment.
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