FINANCIAL MARKETS
NEW YORK—Stocks retreated from their record highs on Monday, ahead of a frenetic week for markets.
Investors are waiting to learn who the next head of the Federal Reserve will be, what several of the world’s biggest central banks will decide on interest rates, and whether Apple and other big U.S. companies can keep piling their profits higher. In the meantime, reports continued to show that the economy is strengthening and negotiations continued in Washington to cut income-tax rates.
Amid the many cross currents, the Standard & Poor’s 500 index fell 8.24 points, or 0.3 percent, to 2,572.83 from its record set on Friday. Losses for health care stocks, telecoms and other areas of the market overshadowed gains for technology companies and energy producers.
The Dow Jones industrial average fell 85.45, or 0.4 percent, to 23,348.74, and the Nasdaq composite dropped 2.30, or less than 0.1 percent, to 6,698.96. Smaller stocks fell more than the rest of the market, and the small-cap Russell 2000 index lost 17.42, or 1.2 percent, to 1,490.90.
Investors expect President Donald Trump to announce his choice for the next chair of the Federal Reserve by the end of the week. The central bank has played a pivotal role in the economy’s recovery from the Great Recession and the stock market’s leap to record after record. Jerome “Jay” Powell, a member of the Federal Reserve’s board, is Trump’s leading candidate to replace Janet Yellen as the head of the nation’s central bank, with an announcement planned for Thursday, according to senior administration officials.
The choice could have far-ranging effects on the markets, particularly if the new chair advocates a more aggressive policy in raising interest rates than Yellen has. Low interest rates have helped to push returns higher for bond funds, stocks and all kinds of other investments around the world. But pressure may be rising for the Fed to increase rates more quickly.
A report on Monday showed that U.S. consumer-spending growth accelerated last month, led by a pickup in auto sales. It’s the latest piece of evidence that the economy is picking up momentum.
The Federal Reserve is scheduled to start a two-day meeting on Tuesday. Most investors expect the Fed to raise rates at its next meeting in December, which would be the third increase of the year.
This week will also see more than 100 companies in the S&P 500 index report their earnings results for July through September. Strong earnings growth has helped to drive the stock market higher, and tech stocks have been delivering some of the most consistent growth. They’ll likely need to continue to do so to justify their lofty stock prices.
In the commodities market, benchmark U.S. crude rose 25 cents to settle at $54.15 per barrel. Brent crude, the international standard, rose 46 cents to $60.90 a barrel.
Natural gas was close to flat at $2.97 per 1,000 cubic feet, heating oil added a penny to $1.88 per gallon and wholesale gasoline was close to flat at $1.76 per gallon.