Stock market today: Nasdaq edges higher, Dow drops as investors await key signals on inflation, economy

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US stocks closed mixed on Monday as Wall Street braced for a week full of key economic data signals. The benchmark S&P 500 (^GSPC) hugged the flat line while the tech-heavy Nasdaq Composite (^IXIC) rose about 0.2%. Meanwhile, the Dow Jones Industrial Average (^DJI) dropped roughly 0.4%, or less than 150 points. In single stock moves, Nvidia (NVDA) finished the day about 4% higher, sparking a rally in the tech sector. Wall Street is coming off a whipsaw week that has left markets jumpy and "on edge." Though the major indexes practically ended last week where they had started, it didn't come without volatility throughout the week. Strategists say that is likely to continue — and this week comes with plenty of opportunities. Wednesday provides a fresh look at the state of inflation with the latest release of the Consumer Price Index. Then Thursday comes with two key signals on the state of the US consumer: a reading on July's retail sales and Walmart (WMT) earnings. Wall Street once again sees good news as good news, so volatility this week may depend on the signals those data introduce. Either way, though, markets are seeing a slowing economy, which has shifted the debate from whether the Federal Reserve should cut interest rates in September to how much it should cut them. A small majority of traders expects a 25 basis point cut next month, while the balance — around 48% — see a bigger 50 basis point cut coming. LIVE COVERAGE IS OVER 9 updates Stocks close mixed as investors await key economic data US stocks closed mixed on Monday as investors look ahead to a full week full of key economic data, highlighted by July's Consumer Price Index (CPI) on Wednesday. The benchmark S&P 500 (^GSPC) hugged the flatline while the tech-heavy Nasdaq Composite (^IXIC) rose about 0.2%. Meanwhile, the Dow Jones Industrial Average (^DJI) dropped roughly 0.4%, or less than 150 points. In single stock moves, Nvidia (NVDA) finished the day about 4% higher, sparking a rally in the tech sector. Don't panic: Dips, pullbacks, and corrections are normal Markets are in recovery mode following the most volatile 5-day stretch of the year last week. But don't panic. Pullbacks and dips aren't anything new. "Pullbacks are the stubbed toe of the stock market," LPL Financial's Adam Turnquist and George Smith wrote in a note to clients on Monday. "The pain [is] acute but not worthy of a full-blown panic." The duo blamed last week's volatility on overbought financial conditions in Big Tech, the unwinding of the yen carry trade, and waning confidence in a soft landing following disappointing jobs and manufacturing data. "Like a stubbed toe, pullbacks in the market are inevitable, something investors tend to forget during low periods of volatility." It's true markets have enjoyed an impressive run. Excess pandemic savings, strong corporate earnings, and an artificial intelligence-fueled tech rally are just some of the reasons why stocks have rallied despite the largest and fastest rate-hike cycle from the Fed in 40 years. But as the old adage goes, all good things must come to an end. Last week, the CBOE Volatility Index (^VIX), also known as Wall Street's fear gauge, surged to its highest reading since March 2020, a further sign that bad news for the economy is once again bad news for stocks. Yet, as Yahoo Finance's chart of the day shows, the history of the S&P 500 reminds us that dips, pullbacks, and even corrections of 10% or more are normal and even healthy elements of a bull market. According to data compiled by LPL Financial, stocks experience a pullback of over 5% more than three times per year and a correction of 10% or more around once a year, even in bull runs. In other words, "94% of years since 1928 have experienced a pullback of at least 5%, and 64% of years have had at least one 10% correction," LPL Financial said. "We believe that how common these occurrences are should provide comfort to equity investors, allowing them to be patient, stay investing, and most importantly, to not panic." DJT stock falls after Trump returns to X Trump Media & Technology Group (DJT) took a hit Monday afternoon after former President Donald Trump returned to X just hours ahead of his much-anticipated conversation with Elon Musk. It was the first time Trump had posted on his X account since August 24, 2023. Shares of the parent company of Trump's social media platform, Truth Social, fell as much as 7% to trade around $24.50. Other Trump-related stocks, like conservative-leaning video platform Rumble (RUM), also saw shares fall, down about 4%. Last week, the company reported second quarter results that revealed losses of $16 million, about half of which were tied to expenses related to its SPAC deal. The company also reported revenue of just under $837,00 for the quarter ending June 30, a 30% year-over-year drop. Shares of DJT have been on a bumpy ride in recent months, oscillating between highs and lows. In June, the stock popped (then fell) after current commander in chief Joe Biden stumbled in his first presidential debate of 2024 with Trump. Biden dropped out of the race one month later. Since Biden's announcement, shares have remained under pressure as vice president Kamala Harris, the presumed Democratic presidential nominee, tracks ahead of Trump in the latest polling. In May, Trump was found guilty on all 34 counts of falsifying business records intended to influence the 2016 presidential campaign — a verdict that sent shares down 5% the day after the conviction. Trump Media, the parent company of Truth Social, went public on the Nasdaq after merging with special purpose acquisition company Digital World Acquisition Corp. The stock has fallen sharply since the company's public debut at the end of March, when shares hit a high of more than $71 shortly after it began trading in late March. Inflation will start to get more attention from the Fed: Oxford Economics Markets are eyeing upcoming readings on inflation and the consumer following a volatile run last week, spurred by a disappointing jobs report that showed bad news is, well, bad news again. "Since the release of the July employment report, financial markets have been focused on the labor market and the implications for Federal Reserve policy, but the other side of the central bank's dual mandate will come back into view during the week ahead," Oxford Economics lead economist Nancy Vanden Houten wrote in a note to clients on Friday. The July Consumer Price Index (CPI) will serve as the next big test for inflation (and for markets). "We expect the July CPI to be a touch less friendly than the weaker-than-expected June readings, but don't think the data will shake the Fed's confidence that inflation is moving in the right direction," Houten said. According to Bloomberg consensus estimates, headline inflation, which includes the price of food and energy, is expected to post an annual gain of 3%, unchanged from June's reading. But the metric is set to rise 0.2% month over month after declining 0.1% in June. On a "core" basis, which strips out the more volatile costs of food and energy, inflation is expected to tick up 3.2% year over year, a deceleration from the 3.3% increase seen in June. Monthly core price are expected to have risen 0.2% compared to a 0.1% increase in June. As of Monday, markets were pricing in a roughly 52% chance the Federal Reserve cuts interest rates by 50 basis points by the end of its September, down from a 85% a week prior, per the CME Fedwatch Tool. "In our view, financial markets overreacted to the latest batch of employment statistics, pricing in a 50 basis point (bp) rate cut for September, and more than 100bps in cuts for the year," Houten wrote. "Over the course of the week, markets scaled back expectations, although they continue to anticipate more than 50bps in cuts than we expect for the year. We acknowledge an increased risk of a more aggressive pace of policy normalization if future employment reports are weaker than expected, but we are comfortable with our baseline forecast." Projected Fed rate cut path (Source: Oxford Economics) Recent drop in mortgage rates won't revive the housing market The recent decline in mortgage rates likely won’t spark a significant rebound in the housing market, according to a new note by Capital Economics. Data released last week showed that mortgage rates fell to their lowest levels in over a year amid growing concerns over the health of the US economy. The average 30-year fixed mortgage rates dropped to 6.47% from 6.73% last week, Freddie Mac reported on Thursday. A year ago, the average rate on a 30-year fixed-rate loan was 6.96%. Capital Economics' Thomas Ryan wrote in the note that “rates are still high compared to recent years, discouraging homeowners from moving, while most potential new buyers remain sidelined due to historically stretched affordability.” Expectations that the central bank will cut interest rates starting next month have caused long-term bond yields to fall, which in turn has pushed mortgage rates downward. The recent drop in mortgage rates “will breathe some life into the market," Ryan wrote. Applications for a mortgage to purchase a home increased just 1% last week and were 11% lower than a year ago. “The bigger picture, though, is that rates have not fallen nearly enough to spark a meaningful recovery in activity,” Ryan wrote. “We may get more of a response from buyers and sellers this time around given that rates have fallen to a lower level, and more time has elapsed. Based on past form, however, it seems that borrowing costs would have to fall below 5% to see a full recovery in home buying,” the economist added. Technology the lone big winner on Monday The S&P 500 is clinging to gains of about 0.2% on the day in a narrowly driven day for the 11 sectors. Technology (XLK) is the clear outperformer, rising 1%, while Energy (XLE), up 0.3%, is the only other sector in the green. Source: Yahoo Finance Nvidia rises more than 5%, leading tech rally Nvidia stock (NVDA) rose more than 5% on Monday morning, leading a rally in tech stock as talk of delays for the company's Blackwell next-generation chip remains in focus on Wall Street. Technology (XLK) was the leading sector in the S&P 500 on Monday, up more than 1.5%. UBS analyst Timothy Arcuri maintained his Buy rating on the stock and a $150 price target in a note to clients on Monday while also remarking that he believes Blackwell customer volume shipments are likely delayed four to six weeks "at most." "Lead customers should have first Blackwell instances stood up in April 2025 timeframe," Arcuri wrote. "AI labs are still upsizing and lengthening their instance commitments and enterprises are rapidly growing as a proportion of the demand mix — both bullish indicators." Additionally, Arcuri argued the market may be underestimating Nvidia's future earnings growth. For now, Arcuri believes the market is currently pricing in peak earnings growth for Nvidia in 2025. But Arcuri argued that 2026 "seems more likely to be up again given our customer discussions." Also on Monday, Bank of America analyst Vivek Arya noted Nvidia is one of the firm's top "rebound" picks amid what he expects to be a comeback for semiconductors to end 2024. "Our base case remains for a [semiconductor] rebound likely in Q4 as seasonal headwinds dissipate," Arya wrote in a note to clients. More jittery markets to start the week Stocks are seesawing again on Monday, continuing the action seen throughout last week, which started with a massive sell-off before the major indexes closed the week nearly flat. All three of the major indexes reversed course early Monday, shifting from green to red as markets await key economic data. As Bank of America US equity and Canada strategist Ohsung Kwon pointed out in a weekly note on Monday, markets are bracing for a big move after Wednesday's Consumer Price Index (CPI) inflation reading. "The growth overhang [on markets] still remains, with a big CPI hurdle this week to clear the path for the Fed," Kwon wrote. "A soft CPI could provide a relief rally, but a hot CPI would be a major downside event, potentially bringing stagflation fears back to the market. A hotter print would be a bigger surprise to the market than a softer print." Stocks drift higher at the open US stocks rose slightly on Monday as Wall Street braced for a week full of key economic data signals. The S&P 500 (^GSPC) and the Nasdaq Composite (^IXIC) popped about 0.3%. Meanwhile, the Dow Jones Industrial Average (^DJI) was higher by less than 0.2%. There were limited catalysts driving the market action early Monday morning, as investors await a busy week of economic data that will begin in earnest on Tuesday with the latest reading of the Producer Price Index (PPI).