S&P 500 Cuts Losses on Energy Rally, but Tech Slump Weighs

By Yasin Ebrahim

Investing.com -- The S&P 500 cut the bulk of intraday losses Monday, but remained under pressure amid a slump in tech as investors continued to digest Federal Reserve chairman Jerome Powell’s recent warning that interest rates will be higher for longer to combat above-trend inflation.

The S&P 500 fell 0.26%, the Dow Jones Industrial Average slipped 0.23%, or 73 points, the Nasdaq was down 0.60%.

The rout in technology from Friday continued into the new trading week, pressured by rising Treasury yields as investors price in higher for longer interest rates following Powell’s hawkish speech at Jackson.

Powell suggested that the central bank would be willing to keep interest rates higher and tolerate a slowing economy to bring down inflation. With the Fed’s September meeting just weeks away, incoming economic data including the fresh jobs and inflation will likely sway the Fed’s decision to hike rates by 0.50% or 0.75% next month.

“[S]hould August inflation show a second month of cooling price pressures, at least some Fed officials will likely be comfortable with a lesser 50bps hike…,” Stifel Economics said in a report.

Big tech names including Apple (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) fell about 1%.  

Netflix (NASDAQ:NFLX), meanwhile, is reportedly weighing up the option to launch its ad-supported streaming services at $7 to $9 monthly price, Bloomberg report.

In the ongoing Twitter-Musk legal saga, meanwhile, Elon Musk reportedly subpoenaed a Twitter whistleblower, seeking documents to support allegations about fake and spam accounts on the social media giant's platform.  

Semiconductor stocks also piled on the pressure as the mid-week revival seen last week – following quarterly results from Nvidia (NASDAQ:NVDA) – reversed.

Monolithic Power Systems (NASDAQ:MPWR), ON Semiconductor (NASDAQ:ON) and Advanced Micro Devices  (NASDAQ:AMD) were among the worst performing chip stocks.

Energy shrugged the broader market drop, driven by rising oil prices as investors continue to mull the prospect of major oil producers cutting output.

In deal news, Walmart (NYSE:WMT) was flat after making a bid to buy the remaining 47% stake in South African retailer Massmart that it doesn’t already own for $377.6 million.