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US stocks fell on Monday after Federal Reserve Chair Jerome Powell tempered expectations for an early interest rate cut, raising the stakes for a busy week of corporate reports to keep the recent surge going.
The S&P 500 fell 0.1%, indicating a minor reversal from the benchmark’s record-breaking surge. The Dow Jones Industrial Average fell 0.5%, while the tech-heavy Nasdaq Composite remained unchanged in midday trading.
Stocks fell following a wild week that finished with weekly gains thanks to a massive January jobs report, NFP data, as well as solid high-profile earnings reports.
Positive Sentiment Diminished Following Powell’s Interview
This positive sentiment was dashed after Powell, in a “60 Minutes” interview aired Sunday, reiterated his midweek message that the central bank will be careful in selecting whether to drop interest rates. He stated that the “danger of moving too soon is the job’s not quite done” in combating inflation.
As a result, traders reduced their bets on rate cuts not just in March, but also in May, according to the CME FedWatch Tool. The 10-year Treasury yield (TNX) increased by six basis points to 4.08%, indicating a decline in US Treasuries.
Earnings In Focus
nvestors are again searching for inspiration in quarterly results this week, following successful reports from Meta and Amazon last week, which helped drive equities into a rally mode despite little on the economic calendar. McDonald’s begins the wave of quarterly earnings action on Monday with a bit of a disappointment, as sales fell short of Wall Street expectations.
