Stocks traded lower on Monday amid a January rally as investors looked ahead to a busy week ahead of earnings season and the Federal Reserve’s interest rate hikes.
The Dow Jones industrial average fell 83 points, or about 0.3%. The S&P 500 fell 0.6%, while the Nasdaq Composite fell 1%.
Wall Street is coming off a successful week as the stock market’s January rally continues. The Nasdaq Composite gained 4.3% for the week, while the S&P 500 and Dow added 2.5% and 1.8%, respectively. The S&P 500 is up 5.3% in 2023, following a 19% loss last year, and ended Friday at a new year-to-date high.
There are many tests this week for this 2023 rally. About 20% of the S&P 500 will report earnings this week, including McDonald’s and General Motors on Tuesday, followed by tech giants Apple, Meta Platforms, Amazon and Alphabet later in the week.
The Federal Open Market Committee meets on Tuesday and Wednesday, when the central bank is expected to raise rates by a quarter of a percentage point. Investors will be looking for clues about how much higher the central bank will raise rates in the fight against inflation. Traders have boosted stocks this year as softer inflation reports suggest the central bank may soon pause its hiking campaign.
“Despite several positive developments, we think the good news is now too expensive, and that reality will return at the end of the month and the Fed’s determination to rein in inflation,” wrote Mike Wilson, chief US equity strategist at Morgan Stanley. Note Monday.
