The S&P 500 finished lower on Monday, erasing earlier gains that brought the benchmark index to trade at its highest level on an intraday basis in nine months.
Apple lost about 0.8%, retreating from all-time highs touched earlier in the session. The iPhone maker on Monday unveiled its highly anticipated virtual reality headset and a slew of software updates at its annual Worldwide Developers Conference.
Intel shed 4.6% as Apple revealed a new chip, while Nvidia pulled back on valuation concerns after its recent surge. JPMorgan Chase and Goldman Sachs struggled amid news that regulators are considering upping capital requirements at large banks.
Markets are "catching their breath after Friday's broad-based rally," said Ryan Detrick, chief market strategist at the Carson Group. "It's a very lackluster news day, which isn't a bad thing as we consolidate some of those big recent gains we've had."
Stocks rallied last week as Friday's May jobs report signaled to some investors that the long-anticipated recession may no longer be in the cards for the economy — or at least pushed off until 2024. The passage of the debt ceiling bill also boosted investor sentiment.
"What the market is doing ... I think is appropriate, but there are things that we don't know yet and the big issue is the Fed," Mohamed El-Erian told CNBC's "Squawk Box" on Monday.
The Allianz chief economic advisor noted that while major debt and banking fears have dissipated, what comes next hinges on the Federal Reserve's target for bringing down inflation. Markets would appear fairly priced if the central bank "acknowledges that 2% is the wrong target," he said.
Despite recent moves, worries persist over 2023's narrow stock market rally, led by just a handful of tech names, and whether there could be an intermediate-term correction if breadth fails to improve.
"We think as long as the economy continues to chug along and doesn't show any signs of recession —which so far it hasn't — the rest of the market can play catch up, and we'll see some of those other sectors close the gap a little bit," said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
S&P finishes lower, Dow loses nearly 200 points
S&P 500 now extremely overbought, Bespoke says
It may be time to pare stock exposure after the market's recent rally.
Data compiled by Bespoke Investment Group showed the S&P 500 is now in "extreme overbought" territory, based on where it's trading relative to the its 50-day moving average.
"After Friday's rally, the S&P 500 closed 2.47 standard deviations above its 50-DMA, which was the most 'extreme' overbought reading for the index since July 2021," Bespoke said in an email.
The broader market index has rallied nearly 6% in the past three months partly due to strong tech gains.
— Fred Imbert
Markets continue climbing 'wall of worry' despite some bullish signals, Bank of America says
Despite a handful of bullish market signs, some flashing warnings signals are giving investors reasons to remain cautious, according to Bank of America.
"Many indicators have flashed bullish backdrop signals that support the case for a much higher equity market well into 2024," wrote Stephen Suttmeier in a Monday note to clients. "Bearish sentiment, light positioning and record high cash levels suggest that investors continue to fight the tape."
The technical research strategist noted that the 2023 S&P 500 trend mimics some "wall of worry bullish" turns in previous years, including 2020 and 2012.
"Risk management support moves up to 4200-4166, which needs to hold to have confidence in last week's upside breakout," he wrote.
— Samantha Subin
Cash on sidelines is a key variable for the market, JEPI portfolio manager says
Hamilton Reiner, the portfolio manager of the wildly popular JPMorgan Premium Income ETF (JEPI), said Monday that the trillions of dollars sitting in money market funds could become a source of support for stocks even if the U.S. enters a shallow recession, as he expects.
"I think you're going to start to see investors suffering from 'FOMO,'" Reiner said at a media event at the Nasdaq market site. "Do I think all that stuff's out there still? I do. Do I think that it's a reason to be on the sidelines? I don't. Market timing tends to not work over the medium to long-term."
Reiner also rang the open bell at the Nasdaq on Monday to celebrate the one-year anniversary of JEPQ, a sister fund of JEPI that is focused on Nasdaq 100 stocks. The funds, which combine active stock selection with an income-generating options strategy, have about $30 billion in combined assets after raking in about $20 billion of inflows over the past year.
— Jesse Pound
Big Tech stocks responsible for more than half of S&P 500's 2023 gain
A handful of major technology stocks are responsible for more than half of the benchmark index's gain in 2023, according to Goldman Sachs.
Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla and Meta Platforms have returned 53% since the start of the year, while the remaining 493 companies in the benchmark index are responsible for an average return of 0%.
"The market's extremely narrow YTD rally has been a significant headwind to mutual fund performance," wrote David Kostin, the Wall Street firm's chief U.S. equity strategist,
— Samantha Subin
Morgan Stanley's Mike Wilson is still calling for a correction
Morgan Stanley's Mike Wilson is sticking with his bearish call for a tactical correction despite the recent rally driven by technology stocks.
"Hotter but shorter cycles persist — we continue to forecast an earnings recession this year that we don't think is priced," Wilson, the bank's head of U.S. equity strategy, said in a note. "We still expect a tactical correction as the cyclical bear market concludes."
The widely followed strategist stood by his base case for the S&P 500 to finish 2023 at 3,900, about 9% below Friday's close of 4,282.37. Wilson's forecast is well below the average year-end forecast of 4,157 from Wall Street strategists, according to CNBC Pro's market strategist survey, which rounds up the top 15 strategists' predictions.
— Yun Li
Unity pops 14% on Apple partnership news
— Jordan Novet, Samantha Subin
Oppenheimer adds Costco back to its top pick list
Club retailer Costco is looking more attractive for investors after a series of weak reports from other retailers, according to Oppenheimer.
Analyst Rupesh Parikh added the retailer back to the firm's top pick list after removing Costco last November. Parikh said in a note to clients that stock could benefit from weakness at other retailers.
"Given the pullback in shares since then, the company's better than expected delivery of bottom-line profitability on a sub 4% comp vs. our forecasts, and more muted buyside N-T comp expectations, we see an improved nearer-term outlook for outperformance," Parikh said. "This includes potential money flows amidst challenges at many discretionary retailers lately."
Oppenheimer has a price target on Costco of $575 per share. The stock was trading at about $518 per share.
— Jesse Pound
Sand Hill Global's Vingiello trims Nvdia position
Brenda Vingiello, chief investment officer at Sand Hill Global Advisors, told CNBC's "Halftime Report" she trimmed her position in red-hot chipmaker Nvidia.
"This is a stock where there's a lot of good news baked in," she said. "Our strategy and our style is to remain disciplined and trim along the way. It's a position we established in March 2020. We've trimmed it once since then."
Nvidia is the best-pe