Technology stocks weighed on the Nasdaq and S&P 500 on Monday as cautious investors awaited a crucial Federal Reserve monetary policy decision later in the week and most traders priced in a sharp reduction in borrowing costs.
Rate-sensitive chip stocks fell: Nvidia NVDA.O, which led much of this year’s rally, was down 2%, Broadcom AVGO.O lost 3.4% and Qualcomm QCOM.O fell 1.5%, sending the Philadelphia SE Semiconductor Index .SOX down 2%.
Other growth stocks also suffered losses. Apple AAPL.O fell 3% after an analyst at TF International Securities said demand for its latest shares iPhone 16 models was less than expected.
Amazon.com AMZN.O lost 1%, while Tesla TSLA.O fell 0.30%.
“Investors are reducing their risk exposure ahead of the Fed’s decision. The market is simply being a bit more pragmatic and moving away from technology,” said Andre Bakhos, managing partner at Ingenium Analytics.
At 11:38 a.m., the Dow Jones Industrial Average .DJI was up 64.71 points, or 0.16%, at 41,458.49, the S&P 500 .SPX was down 13.14 points, or 0.23%, at 5,612.88 and the Nasdaq Composite .IXIC was down 146.18 points, or 0.83%, at 17,537.79.
Seven of the 11 S&P 500 sectors rose slightly. Financials .SPSY rose 0.90%, while rate-sensitive technology stocks .SPLRCT were the biggest laggards, down 1.2%.
Markets have rallied since the beginning of this year on expectations that the world’s most influential central bank will soon begin its cycle of monetary policy easing.
The Dow .DJI hit an intraday record high and the S&P 500 .SPX is less than 1% away from its own milestone.
The benchmark index and the tech-heavy Nasdaq .IXIC posted their biggest weekly gains in about 11 months on Friday, though analysts attributed the optimism to signs of a robust economy rather than expectations of rate cuts.
Following a series of mixed economic reports and comments from a former monetary policymaker in recent weeks, traders have changed their minds about what decision the central bank will make at its meeting on September 17-18.
The odds of a 50-basis-point cut are at 61%, up from 30% a week ago, according to the CME FedWatch tool, which showed a 39% chance of a 25-basis-point reduction. There are concerns that an overreaching move could mean the Fed expects the economy to cool at a faster pace than previously anticipated.
“The key is the discourse and the rhetoric around tapering. How the Fed is going to address the macroeconomic outlook and what investors will take from it. Until then, the market will be relatively calm,” Bakhos said.
Intel Corp INTC.O rose 3.4 percent after a report showed it qualified for up to $3.5 billion in federal grants to make semiconductors for the U.S. Department of Defense.
Boeing BA.N fell 1.3% after the planemaker said it would freeze hiring and consider furloughing workers in the coming weeks as a strike by its workers stretched into a fourth day.
In economic data, reports on retail sales, weekly jobless claims, housing starts and industrial production will be released during the week.
Advancing stocks outnumbered declining stocks by a ratio of 1.64 to 1 on the New York Stock Exchange and 1.07 to 1 on the Nasdaq.
The S&P 500 posted 79 new 52-week highs and one new low, while the Nasdaq Composite posted 111 new highs and 45 new lows.
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