Wall Street’s main indexes ended lower on Monday as investors anxiously await inflation data this week to assess the outlook for interest rates and eye U.S.-China trade developments.
Investors expect the recent shakeup at the U.S. Federal Reserve and signs of labor market weakness could nudge the central bank into adopting a dovish monetary policy stance later this year, fueling much of the optimism.
July’s consumer inflation report is due on Tuesday, and investors anticipate that the Fed will lower borrowing costs by about 60 basis points by December, according to data compiled by LSEG.
“The inflation data is starting to embody the more direct tariff impacts on the consumer, raising concern that inflation will remain sticky,” said Eric Teal, chief investment officer at Comerica Wealth Management.
“Lower inflationary readings and slower growth numbers are needed to support the case for lower rates.”
The Dow Jones Industrial Average closed 200.52 points, or 0.45%, lower to 43,975.09, the S&P 500 lost 16.00 points, or 0.25%, to 6,373.45 and the Nasdaq Composite lost 64.62 points, or 0.3%, to 21,385.40.
Shares of Nvidia and Advanced Micro Devices were volatile through the day, ending 0.35% and 0.28% lower respectively.
A U.S. official told Reuters the semiconductor majors had agreed to give the United States government 15% of revenue from sales of their advanced chips to China.
Analysts said the levy could hit the chipmakers’ margins and set a precedent for Washington to tax critical U.S. exports, potentially extending beyond semiconductors.
Separately, U.S. President Donald Trump signed an executive order extending a pause in sharply higher U.S. tariffs on Chinese imports for another 90 days, a White House official said.
Enabling semiconductor sales to China was an integral issue in the agreement Washington and Beijing signed this year, which expires on Tuesday. Trump lauded China’s cooperation in talks at a White House press conference on Monday.
Traders took a step back after the S&P 500 .SPX and the Nasdaq last week logged their strongest weekly performances in more than a month.
Citigroup and UBS Global Research became the latest brokerages to raise their year-end targets for the benchmark S&P 500.
Micron Technology raised its forecast for fourth-quarter revenue and adjusted profit, boosting its shares 4%.
Intel rallied 3.5% after a report said CEO Lip-Bu Tan arrived at the White House on Monday. Trump had called for his removal last week.
TKO surged 10% after Paramount bought the rights from the live entertainment company to exclusively distribute UFC events for the next seven years in a deal valued at around $7.7 billion.
Declining issues outnumbered advancers by a 1.18-to-1 ratio on the NYSE. There were 251 new highs and 98 new lows on the NYSE.
On the Nasdaq, declining issues outnumbered advancers by a 1.24-to-1 ratio.
The S&P 500 posted 15 new 52-week highs and 17 new lows while the Nasdaq Composite recorded 73 new highs and 121 new lows.
Volume on U.S. exchanges was relatively light, with 15.5 billion shares traded, compared to an average of 18.3 billion shares over the previous 20 sessions.
