US stocks traded mixed as of midday on Monday as investors reacted to weaker-than-expected retail sales data and comments from Treasury Secretary Scott Bessent, which added to economic uncertainty ahead of this week’s Federal Reserve policy meeting.
The S&P 500 (GSPC) climbed 0.2%, while the Dow Jones Industrial Average (DJI) rose 0.6%. Meanwhile, the tech-heavy Nasdaq Composite (IXIC) fell about 0.3%, weighed down by declines in major technology stocks. The indexes attempted to recover from last week's sell-off, which saw the S&P 500 enter correction territory and the Dow suffer its worst week since March 2023.
Bessent attempted to reassure investors, stating that market corrections are a natural part of economic cycles but warning that there are "no guarantees" the US will avoid a recession.
Market Movers:
- Intel (INTC) +7.5% – Shares surged after reports surfaced that new CEO Lip-Bu Tan is planning significant changes to the company’s AI and manufacturing strategies. Investors welcomed the news, as Intel has struggled to compete in the AI sector. The company’s stock has been down roughly 60% over the past year but is now up nearly 30% year-to-date.
- Nvidia (NVDA) -2.46% – Shares slid ahead of the company’s highly anticipated GTC conference, where CEO Jensen Huang is expected to unveil new AI chips. The decline comes after an 8% gain last week as investors speculated on upcoming product announcements.
- Guess? (GES) +27% – The clothing retailer’s stock skyrocketed after it received a buyout proposal from WHP Global at $13 per share. Shares traded above $12 at midday, reflecting strong investor optimism over the potential deal.
Economic Data Fuels Rate Cut Speculation
Monday’s economic data added to speculation that the Federal Reserve might be more inclined to cut rates this year. Retail sales for February rose just 0.2%, falling short of the expected 0.6% increase. Additionally, January’s sales were revised lower from a 0.9% drop to a steeper 1.2% decline.
Meanwhile, the New York Fed's Empire State Manufacturing Index plunged to -20 in March from 5.7 in February, signaling a sharp contraction in business activity. The weak economic data could push the Fed to consider rate cuts sooner than expected, although officials have maintained a cautious stance.
Tech Stocks Struggle as "Magnificent Seven" Slumps
The Nasdaq Composite’s decline was largely driven by weakness in the so-called "Magnificent Seven" tech stocks. Nvidia, Alphabet (GOOG, GOOGL), Amazon (AMZN), Meta (META), Apple (AAPL), Microsoft (MSFT), and Tesla (TSLA) all traded lower. Apple, Amazon, Meta, and Nvidia each dropped more than 1%, while Tesla saw a steep decline of over 5%.
Market strategists have noted that a broader rally will require renewed strength from these mega-cap tech stocks. Citi US equity strategist Scott Chronert emphasized that "for the market to go higher from here, you need the broadening thesis to happen, but you need your Mag Seven to contribute."
Looking Ahead
All eyes are on the Federal Reserve's two-day meeting beginning Tuesday. While the central bank is widely expected to hold interest rates steady, investors will scrutinize any signals regarding future policy direction, especially in light of economic slowdown concerns and ongoing trade uncertainties tied to Trump’s proposed tariffs.
With the market facing headwinds from slowing growth and shifting monetary policy expectations, investors should brace for continued volatility in the days ahead.