U.S. stocks traded mixed on Monday, with tech stocks feeling the pressure as investor focus shifted to the Federal Reserve's upcoming interest rate decision. The Dow Jones Industrial Average (DJI) rose 0.3%, while the S&P 500 (GSPC) slipped 0.1%. Meanwhile, the tech-heavy Nasdaq Composite (IXIC) fell 1%, weighed down by losses in big tech names such as Apple.
The Fed's highly anticipated, first interest rate cut in four years is sparking uncertainty. Traders are pricing in a 61% chance that the central bank will implement a more significant 50-basis-point cut during its meeting later this week, bringing the rate range to 5.0%-5.25%. The other possibility is a smaller 25-basis-point cut, now considered less likely at 39%.
Market Movers:
- Apple (AAPL) fell over 3% amid concerns about weaker-than-expected demand for the new iPhone 16. Analysts have reported that early sales figures for the updated model are underperforming last year’s iPhone 15 launch, leading to a decline in investor confidence
- Intel (INTC) gained 2.8% after reports that the chipmaker secured a deal with the U.S. Defense Department worth up to $3.5 billion. This follows the company's previous funding from the Chips and Science Act, further boosting its stock.
- Zillow (Z) shares rose over 3% following an upgrade from Wedbush, which raised the company’s price target from $50 to $80. Analysts cited falling mortgage rates as a positive factor for the real estate platform and growth in its residential and rental revenue forecasts.
- Bausch + Lomb (BLCO) surged 4% after reports indicated the company is exploring a potential sale, a move aimed at disentangling itself from its parent company, Bausch Health.
Investors Anticipate Fed Policy Shift
The central point of market movements is the Fed’s decision, which could usher in a significant policy shift as it looks to end its prolonged tightening campaign aimed at curbing inflation. The central bank's decision comes after months of speculation, and a deeper cut could signal concerns over the broader economic outlook. In comparison, a smaller cut might soothe worries about aggressive monetary easing.
Investors are also keeping an eye on the Fed's longer-term strategy. Rate cuts are expected to continue throughout 2025 and 2026, which could lower borrowing costs and spur more economic activity, particularly in the housing market.