NEW YORK — Monday’s downturn in Nvidia stocks interrupted Wall Street’s significant upswing, leading to a decline in U.S. stock indexes from their record peaks.
The S&P 500 index fell 0.6%, relinquishing its 57th record high of the year. The Dow Jones Industrial Average also dropped, losing 240 points, or 0.5%, with the Nasdaq composite witnessing a similar decline of 0.6% from its own record.
Nvidia experienced a notable 2.5% drop, becoming the primary factor influencing the S&P 500 negatively. This decline occurred following news that China is initiating an investigation into the company for alleged violations of its anti-monopoly regulations. Nvidia’s stock has dramatically risen in value because its chips are central to advances in artificial intelligence technology, which amplifies the impact of its stock movements on the S&P 500 compared to others.
The turbulence surrounding Nvidia overshadowed positive gains for Chinese stocks trading in the U.S., buoyed by expectations for increased economic stimulus from China. Despite the losses, around three in seven companies within the S&P 500 exhibited gains.
Investors are particularly focused on midweek reports regarding inflation, with economists predicting a stabilization of consumer inflation rates for the previous month. A separate report anticipated for Thursday might indicate an uptick in wholesale inflation.
These figures will be among the last crucial data points for the Federal Reserve ahead of its upcoming interest rate meeting next week. Many expect that the central bank will enact its third rate cut of the year, a move motivated by efforts to stimulate a slowing job market while maintaining inflation close to the target of 2%.
The Fed’s gradual reduction of its primary interest rate—which has been at a two-decade high since September—aims to reinvigorate economic activity but raises concerns about fueling inflation. The anticipation of interest rate cuts has been a significant driver behind the frequent record highs achieved by the S&P 500 in 2023.
Mark Hackett, chief of investment research at Nationwide, noted, “Investors should enjoy this rally while it lasts—there’s little on the horizon to disrupt the momentum through year-end,” while cautioning that an overheated market could soon stumble.
In other stock market news, Interpublic Group surged by 3.6% following an announcement that Omnicom will acquire the marketing firm in an all-stock arrangement. Combined, the two firms reported revenue of $25.6 billion last year, while Omnicom’s stock plummeted by 10.2%.
Macy’s saw a rise of 1.8% after Barington Capital Group, an activist investor, urged the retailer to initiate a $2 billion stock buyback over the next three years and implement additional strategies to increase stock value.
Super Micro Computer’s stock increased by 0.5% as the company reported it secured an extension to maintain its listing on the Nasdaq until February 25, while it works on filing overdue financial documents. Earlier this month, Super Micro was cleared of any wrongdoing related to its management and board following an investigation prompted by the resignation of its public auditor.
Overall, the S&P 500 index experienced a decrease of 37.42 points, bringing it to 6,052.85, the Dow dropped by 240.59 points to 4,401.93, and the Nasdaq composite lost 123.08 points, closing at 19,736.69.
In the oil industry, the price of benchmark U.S. crude climbed by 1.7% to settle at $68.37 following the reported overthrow of Syrian leader Bashar Assad, who has fled to Moscow. Additionally, Brent crude, the international benchmark, increased by 1.4%, reaching $72.14 per barrel.
Gold prices also experienced a rise, climbing 1% to $2,685.80 per ounce due to the market uncertainties following the end of the Assad family’s lengthy governance.
Internationally, Hong Kong’s Hang Seng index surged by 2.8% with expectations of a “moderately loose” monetary policy from Chinese leaders, marking a significant shift after a decade of more cautious measures. Upcoming planning meetings could further bolster stimulus efforts for China’s economy.
Stocks of several Chinese companies listed in the U.S. rose as well, including Nio with a 12.4% increase and Alibaba Group by 7.4%. Conversely, stocks in Shanghai remained relatively stable.
In South Korea, the Kospi index fell by 2.8% as consequences from President Yoon Suk Yeol’s brief declaration of martial law last week amid budget tensions continue to affect the market.
On the bond front, the yield on the 10-year Treasury increased to 4.19%, up from 4.15% at the end of last week.
