U.S. stocks closed with mixed results on Monday, with the Nasdaq dropping as investors sold tech stocks amid expectations for few to no Federal Reserve rate cuts this year after Friday’s strong jobs data pointed to a still strong economy.
Bank of America economists have erased their rate cut expectations and now see a rate hike as the more likely next move.
“Inflation is above target and the Fed was primarily cutting to ensure a strong labor market, which has been met,” they said in a note. “This means no further cuts needed,” adding they “see risks for the next Fed move more skewed to a hike versus cut.”
The benchmark S&P 500 hit a two-month low as bond yields surged on views the Fed will keep interest rates higher for longer this year. But by the end of the day, the broad S&P 500 index clawed back its losses to close up 0.16%, or 9.18 points, at 5,836.22, and the blue-chip Dow added 358 points, or 0.9%, to 42,297.
Only the tech-heavy Nasdaq ended down 0.38%, or 73.53 points, to 19,088.10. Tech companies generally rely more heavily on borrowing to fuel their growth, and higher rates could curb that.
The benchmark 10-year yield was last up at 4.79%, hitting its highest level since late 2023.
Chip stocks also weigh on Nasdaq
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