Stocks traded mixed on Monday, with tech names struggling ahead of a crucial week dominated by expectations for the Federal Reserve’s first interest-rate cut in four years.
The tech-heavy Nasdaq Composite (^IXIC) fell roughly 0.7%. The Dow Jones Industrial Average (^DJI) rose 0.5%, while the S&P 500 (^GSPC) was little changed after strong weekly wins for the major stock gauges.
Techs are under pressure as Apple (AAPL) shares lose ground amid concerns about iPhone 16 sales. The megacap’s stock fell 2.6% before the bell after The Street reported analyst findings that early demand for the recently updated smartphone is lagging 2023 levels.
More broadly, stocks are diverging amid rising bets that the Fed will opt for a more drastic 50 basis point cut in its monetary policy decision on Wednesday, at the end of its two-day meeting.
The central bank is almost universally expected to bring in the first US rate cut in four years — a significant policy shift and an official end to a years-long tightening campaign designed to tamp down inflation.
Read more: Fed predictions for 2024: What experts say about the possibility of a rate cut
That conviction has put investors on edge over how aggressively the Fed will lower rates, whether by 0.5% or 0.25%. An half-point move would aim to protect the labor market and reduce the risk of recession, but would also risk spooking investors by signaling a dire economic outlook.
As of Monday, traders are pricing in a 59% chance of an outsized move, compared with 50% a day ago. The odds of 25 basis point cut stand at 41%, per the CME FedWatch tool.