Stocks retreated Monday, pushing the S&P 500 and Nasdaq Composite off all-time highs, despite a rallying group of technology stocks tied to the artificial intelligence boom.
The S&P 500 shed 0.12% to 5,130.95, while the Nasdaq Composite slipped 0.41% to 16,207.51. The Dow Jones Industrial Average lost 97.55 points, or 0.25%, to finish at 38,989.83.
With those drops, the broad S&P 500 and technology-heavy Nasdaq returned to charted waters after notching new records last week.
Losses were mitigated by gains of more than 3% in AI darling Nvidia. Super Micro Computer soared 18% after S&P Dow Jones Indices announced it would join the S&P 500 later this month.
A handful of bitcoin-focused stocks including Microstrategy and Coinbase also posted sizable advances as the cryptocurrency neared its 2021 all-time high. That offered further evidence of Wall Street taking on risk in Monday's session.
But other technology laggards ultimately held the market back, with the S&P 500 communication services sector leading the index lower. Apple fell 2.5% after getting hit with a European Union antitrust fine of nearly $2 billion. Tesla dropped more than 7% after announcing new price discounts and incentives late last week.
Outside of technology, Ford added more than 2% on the back of strong sales data. Macy's soared more than 13% after Arkhouse Management and Brigade Capital Management increased their offer for the department store.
JetBlue rose more than 4%, while Spirit Airlines tumbled more than 10%. The airlines said Monday that they would end plans to combine, weeks after losing a federal antitrust lawsuit that jeopardized the $3.8-billion deal.
Monday's losses come as the market has largely raced higher over the past several weeks, fueled by AI-focused excitement. The technology-heavy Nasdaq registered an all-time high on Friday, breaking a 2021 record to become the last of the major stock indexes to reach a record close this year.
"Investors are wondering: Should we be taking some profits at this point, or just staying the course?" said Sam Stovall, chief investment strategist of CFRA Research. With a slightly down market, "I would tend to say that investors are just sort of sitting on their hands and not really doing anything."
This week, traders will look for clues about the future direction of interest rates from Federal Reserve Chair Jerome Powell. The central bank leader is expected to deliver monetary policy updates to the House of Representatives on Wednesday and to the Senate on Thursday.
The ADP Employment Survey and January job openings data will be released on Wednesday, providing further insight into the labor market. Manufacturing and nonfarm payrolls data for February are due Friday.
The three major indexes finished Monday's session lower.
The Dow lost 0.3%, while the S&P 500 ticked lower by around 0.1%. The Nasdaq Composite slid 0.4%.
— Alex Harring
The S&P 500 has closed higher for all but two of the past 18 weeks. And the equity market has shown more resilience toward higher-for-long rates this year than it did last fall, which could be due to the improved growth outlook, according to UBS's head of asset allocation, Jason Draho.
"Cold days, sunny days, rainy days, it's all been the same for the market," Draho wrote in a Monday note.
Although the market may stumble a bit during its upward climb, Draho expects the rest of the year to proceed in a higher direction.
"As for comparisons to the 1990s, between the path for the fed funds rate, IPO activity, technology developments, investor sentiment, and even valuations, it looks more like 1996 than 1999," Draho said.
"The next two weeks should determine if the markets exit March like a lion after entering like a lamb. Even if they do, remember that April showers bring May flowers," added Draho.
— Hakyung Kim
Prior instances when U.S. stocks have risen this relentlessly (since World War II, anyway) have only come in the wake of either a recession or a "bubble scenario" — and the current market has elements of both, Deutsche Bank macro strategist Henry Allen wrote to clients Monday.
"It's rare to see a rally this fast, and when they happen it's usually because the economy is emerging from recession and the stock market has just been through a slump," Allen wrote, noting that the S&P 500 slumped 19.4% in 2022, its fourth-worst annual performance since 1945. "The only time in post-war history that this wasn't the case was during the dot com bubble."
Historically, after strong rallies, what happens next is "the S&P 500 has actually continued to advance over the next 6 and 12 months on every occasion," Deutsche Bank said. What's different this time is that the economy never fell into a recession from which it had to recover, at the same as the stock market rally over the past year "has been unusually narrow by historical standards."
Last year, for example, was the first time since 1998 that the market cap-weighted S&P 500 outdistanced the equal-weighted S&P 500 by more than 10 percentage points, the report noted. Whatever the impetus, with the S&P 500 having advanced in 16 out of the past 18 weeks since the October 2023 low, "it is rare to see such a sustained period of outperformance," Allen wrote.
— Scott Schnipper
The market is going higher while volatility is at low levels while froth at the top is increasing, worrying JPMorgan strategist Marko Kolanovic.
"Stocks continuing to push to new record highs and Bitcoin surging over $60k may indicate accumulating froth in the market," Kolanovic, a widely followed strategist on the Street, wrote Monday. "This may keep monetary policy higher for longer, as premature rate cutting risks further inflating asset prices or causing another leg up in inflation."
"We see a dichotomy in volatility markets: stock vol is near multi-year lows despite expensive valuations/elevated positioning/high concentration, rates vol remains stubbornly high given uncertainty around the timing/pace of rate cuts, and yet FX volatility has moved sharply lower despite elevated rates levels and vols," he added.
The S&P 500 hit a fresh record last week, closing above 5,100 for the first time. The broad market index hovered around the flatline Monday, but it's already up more than 7% year to date.
— Fred Imbert
U.S. gold futures settled at a record high on Monday on the back of market rate cut expectations.
Gold prices typically have an inverse relationship with interest rates, meaning prices rise when rates fall. Gold prices began gaining after January inflation came in at the same level as expectations, with traders widely anticipating an initial rate cut in the second half of 2024.
April-dated gold contracts gained $30.60, or 1.46%, to settle at a record close of $2,126.30 on Monday.
— Lisa Kailai Han
The tech-powered rally has propelled stocks to new heights this year, with all three major indexes notching new closing records in 2024.
UBS sees no end in sight yet for the tech rally — but believes investors would be best suited to diversify their assets.
"With generative AI looking set to be the growth theme of the decade and US large-cap tech companies leading the revolution, we continue to believe that US tech stocks should make up a substantial portion of investors' equity allocations. This means building up a strategic US large-cap holding for those underinvested," the bank wrote. "But investors with excessive exposure should consider diversification, in our view."
To do so, UBS recommended investors consider emerging trends in the industry, so they can broaden their portfolios to "capture the next growth opportunities."
"We think Asia is a compelling destination for tech diversification, and see further potential in AI customs chips and foundries," the bank added.
— Lisa Kailai Han
Technology stocks diverged during afternoon trading, with chipmakers and popular artificial intelligence plays leading the S&P 500's gains.
Nvidia was a top performer, surging more than 6% to new highs, while Super Micro Computer skyrocketed more than 20% amid news that it will join the S&P 500 later this month. Other major chip and technology gainers included Intel and Advanced Micro Devices, last up about 3% and 5%, respectively. Hewlett Packard Enterprise surged nearly 11%.
But Monday's market moves painted a divided technology picture, with Tesla slumping nearly 7% after another round of price incentives. Apple dropped about 3% after getting hit with a nearly $2-billion European Union antitrust fine.
— Samantha Subin
Savita Subramanian, BofA Securities head of U.S. equity and quantitative strategy, raised her S&P 500 year-end target to 5,400 from 5,000, seeing another 5% upside from current levels and a 13% gain for the full year in 2024.
Her new forecast is tied with UBS for the highest among sell-side strategists, and is also about 5% higher than the average projection of 5,032, according to the CNBC Pro Market Strategist Survey, which rounds up the targets from the top 14 Wall Street strategists.
— Yun Li
Solar energy demand from utilities and data centers remains "very strong" as the grid faces a growing electricity load, First Solar CEO Mark Widmar told CNBC Monday.
Widmar told CNBC's "Money Movers" that the "most economical way" to address the growing demand is through "large, utility-scale renewable energy."
"We're very well positioned to address that market," the CEO said.
First Solar is one of the few bright spots in a renewable sector that has been walloped by high interest rates. The solar panel manufacturer is down about 10% year to date, while the Invesco Solar ETF (TAN) is down 19%.
While residential solar stocks took a beating in the fourth quarter, First Solar performed relatively well, beating earnings expectations and booking a record-order backlog.
"Right now, we're on a trajectory that we're going to double our capacity between what we exited in 2012 to where will be in 2025," Widmar said.
— Spencer Kimball
Atlanta Federal Reserve President Raphael Bostic said he's still worried about inflation, writing in an essay Monday that he's concerned about "pent-up" exuberance" that could be unleashed after the central bank starts cutting interest rates.
"If that scenario were to unfold on a large scale, it holds the potential to unleash a burst of new demand that could reverse the progress toward rebalancing supply and demand," he wrote in a post on the Atlanta Fed website. "That would create upward pressure on prices."
Bostic, a voting member this year on the rate-setting Federal Open Market Committee, has recently said he expects two quarter-percentage point rate cuts this year. He described his overall approach now as "grateful and vigilant" that the Fed has been able to reduce the inflation rate without crashing the economy.
—Jeff Cox
Gold futures are on pace for the highest settlement ever dating back to 1974.
The gold contract for April was up $27.1, or 1.29%, to $2,122.70 per ounce. On an intraday basis, gold futures were also near the all-time high of $2,152.30 set on Dec. 4, 2023.
The VanEck Gold Miners ETF (GDX) is up 3.5% and is on pace for the third consecutive day of gains. It's also trading above the 50-day moving average of $28.295.
— Spencer Kimball
Tesla shed more than 7% during midday trading after the electric vehicle maker revealed a new round of discounts and price incentives on Friday.
Among the fresh round of discounts, Tesla said that customers in China would be entitled to nearly $5,000 worth of incentives through March of current Model 3 sedans and Model Y SUVs. Also included is an 8,000 yuan discount on related car insurance products.
— Samantha Subin
The iShares Bitcoin Trust (IBIT) has surged past $10 billion in total assets, less than two months after its launch, according to the fund's website.
The iShares fund has brought in more than $7.7 billion of inflows, the most of all bitcoin ETFs, with the rally for crypto pushing the total asset value even higher.
IBIT is the second biggest bitcoin fund on the market, still trailing behind the Grayscale Bitcoin Trust (GBTC). The Grayscale fund has seen about $8 billion in outflows since it converted into an ETF, but still has about $27 billion in total assets.
— Jesse Pound
The S&P 500 was weighed down in Monday's session by consumer discretionary and communication services stocks.
The two sectors each slid more than 1%, the worst performing two of the 11 that comprise the index. Meanwhile, the benchmark S&P 500 as a whole traded near flat.
Paramount Global led communication services lower with a drop of more than 6%. Warner Bros. Discovery followed, tumbling more than 5%.
Just a handful of communication services stocks bucked the downtrend. Notably, Live Nation was the best performer with an advance of more than 2%.
Tesla was the worst performer of consumer discretionary names, losing more than 7%. V.F. Corporation and Ralph Lauren trailed, with each down around 3%.
Those losses outweighed sizable gains seen elsewhere in the sector. With a rally of more than 3%, Ford notched the largest advance in the sector following strong sales numbers.
— Alex Harring
These are the stocks moving the most in midday trading:
Read the full list of stocks moving here.
— Lisa Kailai Han
The Russell 2000 advanced 0.4% while the S&P 500 traded slightly below the flatline on Monday.
So far in March, the small cap index is up 1.2%, versus the S&P 500's 0.8% gain. Nonetheless, the Russell still lags the broader market on a year-to-date basis; it is up just 2.6%, while the S&P 500 has jumped 7.7% during the period.
— Hakyung Kim
Ford shares popped more than 4% after the carmaker reported strong February sales, tied in part to hybrid and electric vehicles.
The Detroit automaker said Monday that it recorded sales of more than 174,000 cars and trucks in February. That marks an increase of about 10.5% compared with the same month a year prior.
Ford was helped by jumps of around 81% in electric vehicles and 32% in hybrid models.
With Monday's advance, shares are up more than 6% so far in 2024.
— Alex Harring, Michael Wayland
A mixed performance among the different sectors comprising the S&P 500 can signal the market has more room to run, said John Stoltzfus, Oppenheimer's chief investing strategist.
The benchmark index has continued grinding to new all-time highs in recent weeks, worrying investors about how much more it can run. But Stoltzfus said variance within the different industries proves the rally may have more steam — if laggards can join the strong performers.
"There's likely room for a further broadening of this year's stock market rally and opportunity to see equities further climb the proverbial wall of worry," he told clients.
Information technology has led the index higher this year via a gain of more than 12%. On the other hand, utilities and real estate have dropped more than 3% and 1%, respectively, over the same period.
— Alex Harring
Crude oil futures held steady Monday after OPEC+ extended production cuts through the second quarter.
The West Texas Intermediate contract for April lost 19 cents, or 0.24%, to $79.78 a barrel. May Brent futures gained 5 cents, or 0.06%, to $83.60.
OPEC and its allies agreed Sunday to roll over production cuts of 2.2 million barrels per day through at least the end of the second quarter to support crude prices. The move was widely anticipated by the market.
Oil prices are likely to trade at higher highs and higher lows, though Brent will remain in a range of $73 to $96 a barrel, according to a research note from Bank of America published Monday.
— Spencer Kimball
The Nasdaq 100 index, composed of 100 of the largest nonfinancial companies that trade on the exchange, has gone 302 days without a -2.5% down day — it's third longest streak since 1990, according to BTIG.
The index is seen as a proxy for growth stocks.
"While it's not bearish per se, it does speak to some complacency short-term," said Jonathan Krinsky, BTIG's chief market technician.
"With that said, things continue to broaden under the surface and there are plenty of opportunities outside of the super high-momentum names that are far from timely, in our view," he added.
The Nasdaq 100 has gained nearly 9% year to date.
— Michelle Fox