As investors prepared for the busiest week of the earnings season and a potential interest rate hike from the Federal Reserve, the S&P 500 traded lower on Monday despite a January gain.
The Nasdaq Composite plummeted by nearly 1.2% while the broader market index declined by 0.5%. The Dow Jones Industrial Average gained 12 points, or around 0.04%, during this time.
Following a similar statement from Tesla, Ford shares dropped more than 1% as the carmaker said it is lowering prices and increasing production on its electric Mustang Mach-E crossover. Following a 27% increase in the market price, Carvana shares were briefly suspended.
This week, the rally for 2023 will face several tests. This week, about 20% of the S&P 500 will release their profits, starting with General Motors and McDonald’s on Tuesday and the tech behemoths Apple, Meta Platforms, Amazon, and Alphabet later in the week.
On Tuesday and Wednesday, when the Federal Open Market Committee meets, a quarter-point rate raise by the Fed is anticipated. Investors will be watching for hints as to how much higher the central bank will raise interest rates to combat inflation. Because of lower inflation reports this year, traders have driven stocks higher. They believe that the Fed will soon suspend its rate hike program as a result.
While there have been a number of encouraging events, according to Morgan Stanley’s chief U.S. equity strategist Mike Wilson, “we believe the good news is now priced and reality is likely to come with month’s end and the Fed’s resolve to manage inflation”.
This year’s stock market has started off well. After losing 19% last year, the S&P 500 is up 5.5% this year and finished at a new high on Friday.