The S&P 500 Index is down -0.26%, the Dow is up +0.29%, and the Nasdaq 100 Index is down -1.08%.
US stocks today are mixed, with the Dow Jones Industrials posting a new record high. Weakness in chip stocks today is weighing on the broader market. Stocks have carryover support from last Friday when Fed Chair Powell said “the time has come for policy to adjust” to policy easing. Also, energy stocks are climbing today, with WTI crude oil up more than +3% at a 1-week high.
Dovish comments today from Richmond Fed President Barkin pushed bond yields lower and supported stocks when he said he still sees upside risks for inflation, though he supports “dialing down” interest rates in the face of a cooling labor market.
Stocks are being undercut by concern about the escalation of conflict in the Middle East when more than 100 Israeli warplanes Sunday attacked sites in southern Lebanon. Israeli intelligence said that Hezbollah was about to fire thousands of missiles and drones at northern Israel in retaliation for the killing of one of its commanders in July.
Today’s US economic news was bearish for stocks after July capital goods new orders nondefense ex-aircraft and parts, a proxy for capital spending, unexpectedly fell -0.1% m/m, weaker than expectations of unchanged m/m.
The markets are awaiting earnings results from Nvidia on Wednesday and the US July core PCE price index, the Fed’s preferred inflation gauge, on Friday.
The markets are discounting the chances at 100% for a -25 bp rate cut for the September 17-18 FOMC meeting and at 29% for a -50 bp rate cut at that meeting.