The S&P 500 closed slightly higher on Monday as gains in energy and materials offset a decline in tech stocks. Concerns about prolonged high interest rates ahead of key inflation data spurred the rotation. By the close, the Dow rose 0.9%, the S&P 500 added 0.2%, while the NASDAQ slipped 0.4%.
Energy stocks, including Valero Energy, Baker Hughes, and Schlumberger, climbed over 3%, supported by rising oil prices after U.S. sanctions on Russian oil exports. Materials also advanced, aiding a broader market rebound.
Tech stocks struggled, led by a 4% drop in NVIDIA, following U.S. restrictions on AI chip exports to China. Broader concerns about the Federal Reserve's policy and rising Treasury yields weighed on the sector. Markets now anticipate only one rate cut in 2024 amid inflationary pressures, a reduction from previous expectations.
Attention is shifting to Wednesday’s consumer price index (CPI) report. Economists predict a 2.9% year-over-year increase for December, up from November's 2.7%. The Fed, projecting 2.5% inflation in 2025, remains cautious about easing rates despite signs of moderating price growth.
Earnings season begins this week, with major banks, including JPMorgan Chase and Goldman Sachs, set to report Wednesday. Retailers also made headlines: Macy’s fell 8% on weak guidance, Abercrombie & Fitch dropped 16% despite higher sales forecasts, and Moderna plunged 17% after cutting its 2025 sales outlook by $1 billion.
Wall Street braces for more volatility, as inflation data and corporate earnings are poised to shape market sentiment. Investors remain cautious amid high valuations and economic uncertainties.


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