S&P 500 Edges Lower Ahead of Powell Testimony

The S&P 500 closed slightly lower Monday after hitting a fresh record with advances in chip stocks offsetting weakness in market heavyweight Apple Inc. as investors positioned themselves ahead of economic data and Fed Chair Jerome Powell’s congressional testimony.

Apple lost ground following a $2-billion EU antitrust fine for preventing Spotify and other music streaming services from informing users of payment options outside its App Store.

But rallies in chip stocks, including Nvidia helped advance the S&P 500 to fresh intraday records as investors continued to bet on demand for products powering artificial intelligence (AI) even though were broadly cautious ahead of economic data.

“This is one of those days where investors are on hold for the economic data that’s coming out later this week,” said Burns McKinney, portfolio manager, NFJ Investment Group.

Investors were waiting for insights into the U.S. economy’s health from key monthly data such as readings on the service sector, due on Tuesday, and non-farm payrolls data due Friday, according to Scott Wren, senior global market strategist at Wells Fargo Investment Institute.

“The market is still trying to digest what the outlook is for the economy, earnings and the Federal Reserve,” said Wren but he noted that both institutional and retail investors have some fear of missing out as they watch stocks hit fresh records.

“There’s institutional money that can’t sit on the books and watch the S&P 500 go higher every day and retail investors are starting to have the fear of missing out,” said Wren. “Stocks are expensive but that doesn’t mean they can’t get more expensive before some kind of a pullback. Momentum is carrying the market and positive thinking is carrying the market.”

The Dow Jones Industrial Average fell 97.89 points, or 0.25%, to 38,989.49, the S&P 500 lost 6.09 points, or 0.12%, to 5,130.99 and the Nasdaq Composite dropped 67.27 points, or 0.41%, to 16,207.67.

The Nasdaq had kicked off March by hitting an intraday record high on Friday, also closing at its highest level for two straight days, as the artificial intelligence-driven tech rally continues to steal the spotlight on Wall Street.

The S&P 500 has also been on a winning streak recently, jumping over 21% with four straight months of gains through February. BofA Global Research lifted its year-end target for the benchmark index to 5,400, from 5,000, representing a 5% upside from current levels.

Powell is due to testify before lawmakers on Wednesday and Thursday, with analysts assuming the Fed chief to stay in wait-and-watch mode on policy after a recent escalation in inflation.

AI server maker Super Micro Computer rallied and shoe maker Deckers Outdoor rose ahead of their inclusion in the S&P 500 index.

Shares in Macy’s jumped after real-estate-focused investing firm Arkhouse Management and Brigade Capital Management raised their offer for the department store chain.