Ankika Biswas, Lisa Pauline Mattakal and Caroline Mandl
(Reuters) – Stocks across sectors rose on Monday and blue chips closed at one-month highs as investors fled artificial intelligence stocks and added a few laggards to their portfolios, betting on a Federal Reserve rate cut. year.
The indexes and Nasdaq closed lower due to a retreat from technology stocks whose outsized gains have fueled this year’s rally. Shares of Nvidia (NASDAQ:) fell for a third session as market watchers noted profit-taking at the semiconductor leader after last week’s meteoric rise that made it the world’s most valuable company.
Shares of other chip makers, including U.S. shares of Taiwan Semiconductor Manufacturing, Broadcom (NASDAQ:), Marvell (NASDAQ:) Technology and Qualcomm (NASDAQ:), fell, dragging the index of chipmaker stocks lower.
“The market is selling some winners and buying some laggards,” said Jack Janasiewicz, lead strategist at Natixis Investment Managers. “This is a bit of a nod to the inflation data coming out on Friday, as it is expected to be quite soft.”
Among the 11 S&P 500 industry indices, only the technology and consumer discretionary sectors fell, while the energy sector was the leading gainer.
“There has been rotation in some value areas of the market, such as financials, energy and utilities. Energy has the added benefit of a small jump in oil prices,” said Ed Clissold, chief U.S. strategist at Ned Davis Research. . Oil prices rose on Monday, boosted by expectations of stronger fuel demand and shares of energy and oil services companies rose.
The Dow Jones Industrial Average jumped and snapped a five-day winning streak. The small-cap index also hit its highest level in a week, signaling broader market gains.
With the exception of Nvidia and other chip companies, “the rest of the market is positive, expecting that we are still on track for a soft landing,” said Carl Ludvigson, managing director at Bel Air Investment Advisors.
The biggest story to grab investors’ attention this week was Friday’s report on the Personal Consumer Expenditures (PCE) price index, the Fed’s preferred measure of inflation, which is expected to show modest price pressures.
Investors still expect about two rate cuts this year, estimating a 61% chance of a 25 basis point cut in September, according to FedWatch LSEG data. According to the Fed’s latest forecast, one rate cut is likely to occur in December.
San Francisco Fed President Mary Daly said she doesn’t believe the U.S. central bank should cut rates until policymakers are confident inflation is approaching 2%.
The S&P 500 lost 15.73 points, or 0.29%, to close at 5,448.89, while the Nasdaq Composite lost 190.19 points, or 1.09%, to 17,499.17, according to preliminary data. The Dow Jones Industrial Average rose 257.99 points, or 0.66%, to 39,408.32.
Other data this week includes durable goods, weekly jobless claims and final first-quarter GDP data, as well as the year-over-year recovery in the Russell index. Some quarterly earnings reports must also be submitted.
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