NEW YORK (AP) — Wall Street had a quiet day of trading Monday, ahead of this week’s economic reports that could determine the direction of interest rates.
The S&P 500 slipped 0.2%, although the majority of stocks in the index rose. The Dow Jones Industrial Average fell 41 points, or 0.1%, and the Nasdaq composite fell 0.6%.
Stocks in the artificial intelligence sector, which were mixed after last week’s scary swings, helped keep indexes in check.
Nvidia, the chipmaker that has become the face of the AI boom, added 0.7%. This is one of the most significant upward forces in the S&P 500, following a 4.1% decline last week.
But Oracle fell another 2.7% after its 12.7% drop last week, the worst in more than seven years. Broadcom fell 5.6%.
AI stocks have been hammered by concerns that billions of dollars invested in chips and data centers may not produce a big enough gain to make it worth it. These doubts are causing fissures in the industry, whose previous increases have been the main driver of the US market’s rise to records.
Besides AI, Wall Street’s main focus this week will be on what several important updates say about the health of the U.S. economy.
The jobs report for November will be released on Tuesday, and economists expect employers to have created 40,000 more jobs than they shed during the month. On Thursday, we’ll provide an update on inflation, and economists expect U.S. consumers paid 3.1% higher prices in November than a year ago.
The data is under scrutiny as the Federal Reserve tries to determine whether a slowing job market or high inflation is the bigger problem for the economy. The Fed finds itself in a potentially difficult situation because solving one of these problems by changing interest rates would likely make the other worse in the near term.
The hope on Wall Street is that the labor market will weaken, but only slightly: enough to get the Fed to cut interest rates, but not so much that a recession overwhelms the economy. Wall Street likes low rates because they can boost the economy and investment prices, although they can also make inflation worse.
“With the Fed still appearing to be more focused on labor market weakness than inflation, we are likely facing a ‘bad news is good news’ scenario for the jobs report,” according to Chris Larkin, managing director of trading and investments at E-Trade at Morgan Stanley.
“As long as the numbers don’t suggest employment is collapsing,” that would mean the market would likely welcome weak numbers, he said.
The focus will be on the unemployment rate, not overall job growth figures, as the latter is under downward pressure due to falling numbers of immigrant workers. Economists expect Tuesday’s report to show the unemployment rate at 4.4%, which would keep it near its highest and worst level since 2021.
