S&P 500 closes lower for a second session as tech rally eases

Monday saw a decline in the S&P 500 as the rally that lifted the major averages to all-time highs faded out. Aside from that, investors were anticipating new US inflation data, including the impending CPI print. The heavily weighted Nasdaq Composite had a decline of 0.41%, while the broad S&P 500 saw a loss of 0.11%. By 0.12%, or 46.97 points, the Dow Jones Industrial Average increased.

Super Micro Computer’s shares lost more than 5% in information technology, while Nvidia’s dipped 2%. Investors are wondering if stocks related to AI still have potential to grow following massive gains, which is why both moves have occurred.

The Facebook parent company Meta suffered as well, falling 4.4%. Eli Lilly, a pharmaceutical stock, saw a more than 3% decline outside of technology. These losses occur as traders get ready for Tuesday’s release of the consumer price index for February. According to a Dow Jones survey of economists, the CPI is expected to increase by 3.1% annually and by 0.4% between January and February. The so-called core basket, which does not include volatile food and energy costs, is predicted to rise by 3.7% annually and by 0.3% monthly.

That is prior to the producer-focused index that is scheduled for later this week. The two announcements are among the final significant economic reports that are anticipated prior to the Federal Reserve’s March policy meeting.

Ultimately, it is likely that markets continue to have excessive optimism over the Fed’s capacity to reduce interest rates dramatically in 2024. The inflation figures for February, according to observers, will serve as another reminder for the Fed to proceed with caution.

The S&P 500 and Nasdaq fell from record highs during the week, and Monday’s trading comes after a dismal week for the major averages. Notably, this was the lowest weekly performance for the 30-stock Dow since October.

Dow ticks higher while the S&P 500 and Nasdaq close lower. While the Dow marginally up on Monday, the S&P 500 and Nasdaq Composite both concluded the day lower. The heavily tech-heavy Nasdaq and the broader S&P 500 ended the day 0.4% and 0.1% lower, respectively. It was each person’s second consecutive negative session.

On the other hand, the Dow managed to manage a 0.1% gain. As sentiment and positioning remain high and valuations fairly reflect positive market news, UBS thinks a correction may be on the horizon.

The market is more prone to declines, but analysts think investors shouldn’t lose sight of the wider picture. Aside from recommending that investors maintain a neutral position on US shares, analysts pointed out that, with the “many positive drivers still in place,” it makes sense to invest according to long-term goals.

The market’s strong performance can be attributed to two factors: robust economic growth and reduced inflation. Artificial intelligence is the third factor, as it has made moving forwards riskier.