S&P 500 Edges Higher Amid Tech Earnings and Federal Reserve Decision Awaited

The S&P 500 experienced a modest increase following a volatile trading session. Investors are closely watching major technology companies' earnings reports and a Federal Reserve policy decision on interest-rate cuts expected this week. Key economic data, such as the non-farm payrolls report, will also be pivotal in gauging market direction.

The S&P 500 closed slightly higher after Monday's volatile trading session, as investors anxiously waited for key technology company earnings, a Federal Reserve policy decision on interest-rate cuts, and critical US labor data, all due this week. Quarterly reports from market giants like Microsoft, Apple, Meta, and Amazon.com will reveal whether the tech sector's stocks can maintain their recent momentum.

Investors hope the Fed will signal a potential September rate cut when it concludes its meeting on Wednesday. Meanwhile, Friday's July non-farm payrolls report will be closely monitored for signs of labor market weakness.

"Understandably, we're wavering," said Mona Mahajan, principal and senior investment strategist at Edward Jones, referring to the upcoming catalysts and Friday's Wall Street advance. "Markets are in a wait-and-see mode. We have significant economic news this week, with the Fed meeting on Wednesday and the jobs report on Friday. We also have crucial earnings reports from mega-cap technology," she added.

While technology megacaps have driven Wall Street's record-breaking run, investors are turning their attention to mid- and small-cap stocks, expected to benefit from a low-interest-rate environment. "Many investors want to see if the recent market rotation has sustainability, or if mega-cap technology will dominate through its earnings reports," Mahajan noted.

On Monday, the small-cap Russell 2000 dipped after three weeks of gains. The Dow Jones Industrial Average fell by 49.21 points, or 0.12%, to 40,540.13, the S&P 500 rose by 4.5 points, or 0.08%, to 5,463.6, and the Nasdaq Composite gained 12.32 points, or 0.07%, to 17,370.20.

Among the S&P 500's 11 major industry sectors, consumer discretionary was buoyed by Tesla, as the electric vehicle maker's stock surged after Morgan Stanley listed it as a "top pick" in U.S. autos. McDonald's shares also climbed as its $5-meal deal proved popular among cost-conscious customers, despite a surprise drop in sales. Abbott Laboratories shares faced pressure after a jury ordered the company to pay $495 million in damages related to a harmful formula for premature infants. Crypto stocks like Coinbase Global, Riot Platforms, and Marathon Digital experienced choppy trading, with sharp falls following an initial jump due to seven-week highs in bitcoin prices.

(With inputs from agencies.)