Nasdaq Slips Amid Tech Stock Sell-Off as Investors Eye Federal Reserve Decision

The S&P 500 remained steady while the Nasdaq fell, dragged down by decreased technology stocks. Apple significantly dropped due to lower-than-expected iPhone demand, affecting chipmakers like Nvidia. Investors are cautiously reacting ahead of the Federal Reserve’s anticipated interest rate cut. Despite the tech downturn, the overall market is buoyed by optimism about the economy.

The S&P 500 saw little change while the Nasdaq declined on Monday, impacted by a fall in tech stocks as investors weighed the chances of a significant rate cut from the Federal Reserve later this week. The S&P technology index, leading among the 11 major S&P sectors this year, dropped around 1% as the session's biggest loser.

Apple experienced a nearly 3% drop, significantly impacting both the benchmark S&P index and Nasdaq Composite. This came after a TF International Securities analyst reported lower-than-expected demand for its iPhone 16 models. This sentiment also dragged down chipmakers, with Nvidia, the S&P 500's top performer this year, falling almost 2%, Broadcom sinking 2.2%, and Micron Tech dropping nearly 5%, pushing the Philadelphia SE Semiconductor index down by 1.6%.

Ken Polcari, chief market strategist at SlateStone Wealth, noted, "If people want to raise a lot of money quickly, how do they do it? They sell high-liquidity stocks like Apple, Nvidia, Amazon, and Microsoft. They want to do it before the Fed decision to mitigate risk or have cash ready for opportunities."

The Dow Jones Industrial Average rose 183.69 points, or 0.45%, to 41,577.47. The S&P 500 gained 3.37 points, or 0.06%, to 5,629.39, while the Nasdaq lost 98.14 points, or 0.55%, to 17,585.83. Out of the 11 S&P 500 sectors, only technology and consumer discretionary stocks were down, whereas financials and energy sectors outperformed, rising by 1.04% and 1% respectively.

Markets have rallied this year due to expectations that the Fed will ease monetary policies, combined with data suggesting the economy could avoid a recession. The Dow hit an intraday record high, and the S&P 500 is just 1% away from its July closing record.

Current market expectations, according to CME's FedWatch Tool, see a 59% chance for a 50-basis-point rate cut on Wednesday. Intel Corp jumped 4.1% following a report it qualified for up to $3.5 billion in federal grants for making semiconductors for the U.S. Department of Defense.

Boeing fell 0.8% after announcing a hiring freeze and potential furloughs as its workers' strike continued into its fourth day. Advancing issues outnumbered decliners by a 2.35-to-1 ratio on the NYSE and by a 1.14-to-1 ratio on the Nasdaq.

The S&P 500 posted 86 new 52-week highs and one new low, while the Nasdaq recorded 126 new highs and 72 new lows.

(With inputs from agencies.)