Stocks took a hit as a selloff in the world’s largest companies sent markets tumbling, with traders eagerly awaiting earnings reports from tech giants and key decisions from central banks that will shape the trajectory of markets.
The S&P 500 fell to 5,425, while the Nasdaq 100 slid 1.4%. A gauge of the “Magnificent Seven” megacaps sank 2%, with the Russell 2000 of small firms remaining relatively unchanged. Tech weakness weighed on the market, with Nvidia Corp. tumbling 6% and concerns rising about returns from artificial intelligence.
Investors are particularly focused on Microsoft Corp.’s upcoming earnings report, as it will set the stage for reports from other heavyweights this week. Additionally, all eyes are on the Federal Reserve’s decision on Wednesday, with traders hoping for hints of a potential rate cut.
“If the Fed does not signal a September rate cut, markets could get a bit ugly given recent tech weakness — especially if earnings underwhelm,” said Tom Essaye at The Sevens Report.
The broader stock market rally is dependent on the Fed’s actions and statements regarding interest rates. Traders are closely watching for any signs of policy easing, especially after recent data showed an improved outlook for the economy and job openings beating forecasts.
Goldman Sachs Group Inc. Chief Executive Officer David Solomon suggested that one or two Fed rate cuts later this year are increasingly likely, a shift from his previous prediction of no rate reductions in 2024.
In corporate news, Pfizer Inc. raised its profit expectations for the year, while Merck & Co. beat Wall Street’s profit and sales estimates. JetBlue Airways Corp. announced plans to defer $3 billion in spending on new aircraft, and Archer-Daniels-Midland Co. reported a quarterly profit shrink.
Overall, the market remains volatile as traders brace for upcoming earnings reports, central bank decisions, and economic data releases. Stay tuned for more updates as the week progresses.
