US stocks subdued as investors assess Fed rate path

NEW YORK — The Dow and the S&P500 slipped on Monday, the first session after the biggest weekly percentage gains for the indexes this year, as investors gauged the likely path of interest rates from the Federal Reserve ahead of key inflation data due later in this holiday-shortened week.

Last week, the Fed maintained its guidance for three interestrate cuts this year, and the S&P 500 and the Dow had strong gains while the Nasdaq notched its biggest weekly percentage gain since mid-January.

On Monday, Chicago Fed President Austan Goolsbee said he had penciled in three rate cuts for this year, while Fed Governor Lisa Cook said the central bank needs to proceed with caution as it decides when to start cutting interest rates.

The Dow Jones Industrial Average fell 162.13 points or 0.41% to 39,313.77; the S&P 500 lost 15.99 points or 0.31% to 5,218.19; and the Nasdaq Composite lost 44.35 points or 0.27% to 16,384.47.

Economic data showed sales of new US single-family homes fell unexpectedly in February after mortgage rates increased during the month. The underlying trend remained strong with a chronic shortage of previously owned houses on the market.

The Nasdaq held closer to unchanged for most of the session before fading late, as gains in chipmakers Nvidia and Micron Technology provided support. Nvidia rose 0.76% while Micron Technology surged 6.28% to a closing record of $117.04. Semiconductor shares were choppy, showing initial weakness after a report over the weekend said China had introduced guidelines to phase out US microprocessors supplied by Intel and AMD from government personal computers and servers.

The Philadelphia Semiconductor Index ended 0.34% lower, after alternating between gains and losses during the session. Intel ended down 1.74% and AMD closed 0.57% lower.

Expectations for a Fed rate cut in June were again increasing, with markets now pricing in a 71.9% chance for a cut of at least 25 basis points, according to CME’s FedWatch Tool, up from around 54.7% a week ago. A strong reading could jolt market expectations about the timing of a rate cut.

Boeing rose 1.36% after announcing a broad management shake-up and said CEO Dave Calhoun would step down from his position at the end of 2024. But the planemaker finished off session highs.

On the NYSE declining issues outnumbered advancing ones by a 1.4-to-1 ratio. On the Nasdaq, decliners outnumbered advancers.

The S&P 500 posted 31 new 52-week highs and two new lows while the Nasdaq recorded 113 new highs and 110 new lows.

Volume on US exchanges was 9.67 billion shares, compared with the 12.27 billion average for the full session over the last 20 trading days.