Wall Street Navigates Shifting Tides: Dow Hits Record, Tech Stocks Falter

The financial markets experienced a mixed performance on Monday, with the Dow Jones Industrial Average reaching a new intraday record high, while the S&P 500 and Nasdaq Composite struggled, weighed down by the underperformance of technology stocks. Investors remained focused on the likelihood of an upsized rate cut from the Federal Reserve later this week.

Navigating the Shifting Tides of Wall Street

Dow Soars to New Heights, but Tech Stocks Stumble

The Dow Jones Industrial Average gained 228.30 points, or 0.6%, to close at a record of 41,622.08, surpassing its previous closing high of 41,563.08 set on August 30. The blue-chip index had soared more than 300 points to set an intraday record of 41,733.97. However, the S&P 500 edged up only 0.1%, and the Nasdaq Composite dropped more than 90 points, or 0.5%, as technology stocks weighed on the broader market.

Apple and Chipmakers Drag Down Tech Sector

Apple, the biggest weight on both the S&P 500 and Nasdaq Composite, dropped nearly 3% after an analyst at TF International Securities reported that demand for its latest iPhone 16 models was lower than expected. The concerns over Apple's demand also weighed on chipmakers, with Nvidia, the best performer on the S&P 500 this year, down almost 2%, Broadcom falling 2.2%, and Micron Tech declining 4.4%, pushing the Philadelphia SE Semiconductor index lower by 1.4%.

Investors Seek Liquidity Ahead of Fed Decision

According to Ken Polcari, chief market strategist at SlateStone Wealth in Jupiter, Florida, investors are looking to raise cash quickly by selling the names they can sell rapidly without necessarily destroying the underlying value. "So you can sell Apple, you can sell Nvidia, you can sell Amazon, you can sell Microsoft very quickly and raise a lot of cash," Polcari said. "They want to do it in front of the Fed in case they're getting nervous or they want to raise cash to just have cash available to put to work."

Shifting Expectations on Fed's Rate Cut Decision

The markets have rallied since the start of the year on expectations that the Federal Reserve would begin loosening its monetary policy, while data has suggested the economy would avoid entering a recession. However, market expectations on the size of the rate cut the Federal Reserve will announce on Wednesday have varied widely in recent days, with a 59% chance currently priced in for a 50-basis-point cut, according to CME's FedWatch Tool.

Intel Jumps on Defense Department Grants, Boeing Struggles with Strike

In other market news, Intel jumped 6.4% after a report showed it qualified for as much as $3.5 billion in federal grants to make semiconductors for the Department of Defense. Meanwhile, Boeing lost 0.8% after the planemaker said it was freezing hiring and weighing temporary furloughs in the coming weeks as its workers' strike stretched to its fourth day.