Wall Street stocks ended lower on Monday as investors parsed the outlook for U.S. interest rates and looked ahead to AI chipmaker Nvidia’s quarterly earnings this week while digesting a rally on Friday that lifted the Dow Jones Industrial Average to a record high close.
On Friday, stocks jumped after U.S. Federal Reserve Chair Jerome Powell hinted at the Jackson Hole Symposium that an interest-rate cut could be considered at the central bank’s September meeting, citing recent labor market weakness.
“The market has a Jackson Hole hangover,” said Jake Dollarhide, CEO of Longbow Asset Management in Tulsa, Oklahoma. “Investors are taking a little bit of a breather.”
The Personal Consumption Expenditures Price Index — the Fed’s preferred inflation gauge — is due to be released on Friday, while official nonfarm payrolls data is expected next week. The reports will be crucial, especially after Powell said a rate cut was not certain.
“The focus right now is the labor market,” said Brian Klimke, investment director at Cetera Investment Management.
“We have the job market that’s rolling over a little bit and the economy is weakening, so the Fed needs to act sooner than later and they’re seeing it too.”
Nvidia climbed 1% ahead of its quarterly report on Wednesday, which will be one of Wall Street’s most closely watched events of the week and a crucial test of the scorching AI trade.
With Nvidia making up about 8% of the S&P 500, results of the world’s most valuable company affect vast numbers of Americans who use index investment funds to save for retirement.
“This is an incredibly important event from a market participant standpoint,” said Michael Green, portfolio manager at Simplify Asset Management.
Powell’s comments on Friday nudged major brokerages to revise their expectations, with Barclays, BNP Paribas and Deutsche Bank currently seeing a 25-basis-point reduction in borrowing costs next month.
Traders now see an 84% chance of a Fed rate cut in September, according to CME Group’s FedWatch tool. Remarks from policymakers John Williams and Lorie Logan later in the day will be scrutinized to see if they share Powell’s policy outlook.
The S&P 500 declined 0.43% to end the session at 6,439.32 points.
The Nasdaq declined 0.22% to 21,449.29 points, while the Dow Jones Industrial Average declined 0.77% to 45,282.47 points.
Nine of the 11 S&P 500 sector indexes dropped, led lower by consumer staples, down 1.62%, followed by a 1.44% loss in health care. Friday’s optimism helped the blue-chip Dow close at a record high for the first time since December 2024, and the benchmark S&P 500 logged its strongest one-day gain since May.
On Monday, Jefferies became the latest brokerage to raise its year-end target for the S&P 500.
Beverage company Keurig Dr Pepper tumbled 11.5% after saying it would buy JDE Peet’s for $18.4 billion in cash.
Furniture retailers and Wayfair each declined more than 5% after U.S. President Donald Trump said on Friday his administration would investigate furniture import tariffs.
Intel fell 1% after Trump said the U.S. government was taking a stake in the chipmaker. He also said he would make other deals similar to the one with Intel.
Volume on U.S. exchanges was relatively light, with 14.2 billion shares traded, compared to an average of 17.1 billion shares over the previous 20 sessions.
Declining stocks outnumbered rising ones within the S&P 500 by a 4.0-to-one ratio.
The S&P 500 posted 17 new highs and no new lows; the Nasdaq recorded 125 new highs and 39 new lows.
