On March 20, 2024, traders worked on the trading floor of the New York Stock Exchange (NYSE) in New York City.
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The Dow Jones Industrial Average fell on Monday, kicking off a shortened trading week that paused a record-setting rally on Wall Street.
this Dow Jones Industrial Average It fell 164 points, or 0.4%.this S&P 500 Index fell 0.2%, while Nasdaq Index down 0.1%.
shares Intel The semiconductor company’s shares fell 1%, leading the market lower after the Financial Times reported that China’s new guidelines would ban Intel chips from being used in government servers and computers. United Airlines The company’s shares fell 4% after the Federal Aviation Administration said it would step up scrutiny of the airline after a series of safety incidents.
Markets were looking at a fifth straight monthly gain, with major U.S. stock indexes breaking all-time closing highs last week. The S&P 500 gained about 2.3% last week, while the Dow Jones rose nearly 2% for its best weekly performance since December, nearing the 40,000 level. Meanwhile, the Nasdaq gained about 2.9% during the period.
Those gains were driven by the Federal Reserve’s latest comments that it maintained its schedule for interest rate cuts this year, as well as investors’ continued enthusiasm for technology stocks amid an artificial intelligence-driven rally.Overall investor sentiment remains above historical averages, according to the latest weekly report from the American Association of Individual Investors sentiment surveyreflecting the market’s continued optimism.
Still, some investors are concerned about excessive gains and the potential impact of higher interest rates in the longer term. Sam Stovall, chief investment strategist at CFRA Research, also pointed out that the stock market has become expensive, with the S&P currently trading at a 33% premium to the average price-to-earnings ratio over the past 20 years.
“We are coming off the post-FOMC highs,” he told CNBC. “The market is increasingly vulnerable to market declines or price retracements.”
This week, investors will learn more about inflation trends from the February personal consumption expenditures price index, the Fed’s preferred inflation gauge, released Friday morning. The market’s reaction will be decided next Monday in view of the Good Friday holiday.
Stovall expects investors to react modestly to the PCE data, especially after they have already reacted to the latest Consumer Price Index and Producer Price Index readings.
“It’s kind of like throwing a ping pong ball on the table, the first bounce is the biggest. When PCE finally comes out, it’s like, OK, that’s been done. I don’t think investors care too much about what’s going to happen with it,” he said. ” he added. “I don’t think there’s anything going on in the future that will upend investors’ current expectations.”
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