By Johann M. Cherian and Purvi Agrawal
(Reuters) – Technology stocks weighed on Wall Street and the Nasdaq on Monday as caution set in ahead of a pivotal Federal Reserve policy decision later in the week, with most traders pricing in a sharp drop in borrowing costs.
Interest-rate-sensitive chip stocks were lower, with Nvidia (NASDAQ: ), which has led most of this year’s gains, down 2%, Broadcom (NASDAQ: ) down 2.2% and Qualcomm (NASDAQ: ) losing 1.5%, sending the stock down 1.7%.
Other growth stocks were also hit. Amazon.com Inc (NASDAQ:) lost 0.70% and Tesla Inc (NASDAQ:) fell 1.7%. Apple Inc (NASDAQ:) fell 3.2% after an analyst at TF International Securities said demand for the latest iPhone 16 models was lower than expected.
Markets have been rallying sharply since the start of the year amid expectations that the world’s most powerful central bank will soon begin a monetary easing cycle.
The Dow Jones hit a record high for the day, while the S&P 500 is just a few steps away from a major milestone.
The benchmark and the technology-heavy Nasdaq posted their biggest weekly jumps in about 11 months on Friday, although analysts attributed the optimism to signs of a strong economy rather than expectations of interest rate cuts.
Following a variety of economic reports and comments from a former policymaker in the past few weeks, traders have been swinging their bets on what decision the central bank will make at its meeting on September 17-18.
The CME FedWatch tool puts the odds of a 50 basis point rate cut at 61%, up from 30% a week ago, which showed a 39% chance of a 25 basis point cut. There are concerns that any big move could mean the Fed sees the economy slowing faster than expected.
“Influential investors have been talking about the need for a 50 basis point rate cut and we are seeing increasing talk about recession risks,” said Sam Stovall, chief investment strategist at CFRA Research. “As a result, there are bets that we will get something other than a 25 basis point cut.”
“It would be nice for the Fed to signal that it is ahead of the curve.”
The S&P 500 rose 1.70 points, or 0.02%, to 5,625.06 at 09:50 a.m. local time, and lost 123.01 points, or 0.68%, to 17,564.41.
Seven of the 11 sectors in the S&P 500 rose, although interest-rate-sensitive technology stocks fell 1.2%, while banks rose 0.70%.
Among other engines, Intel Corporation Nasdaq:NASDAQ …
In economic data, retail sales, weekly unemployment claims, housing starts, and industrial production are due during the week.
Advancing issues outperformed declining issues by a ratio of 2.03 to 1 on the NYSE and 1.16 to 1 on the Nasdaq.
The S&P 500 recorded 75 new 52-week highs and 24 new lows, while the Nasdaq Composite recorded 84 new highs and 24 new lows.