Even bigger names are set to report later this week: Microsoft on Tuesday, Apple and Amazon on Wednesday and Meta Platforms on Thursday. Their stock movements carry more weight on Wall Street than anyone else’s because they are the largest by market value.
Such Big Tech stocks had been screaming consistently higher, in part due to investors’ frenzy around artificial-intelligence technology, but they’ve run out of momentum this month amid criticism that they’ve grown too expensive, and as alternatives begin to look more attractive. Last week, profit reports from Tesla and Alphabet that investors found underwhelming raised concerns that other stocks in what’s known as the “Magnificent Seven” could also fail to impress.
What’s helped to support the U.S. stock market even as these behemoths weaken is strength from areas that had earlier been beaten down by high interest rates meant to get inflation under control. Smaller stocks in particular have soared with expectations that slowing inflation means the Federal Reserve will begin cutting interest rates soon.
The smaller stocks in the Russell 2000 index added 0.1% Monday to bring its gain for the month to a market-leading 10.5%.
The Fed will hold its latest policy meeting on interest rates this week, with an announcement coming on Wednesday. Virtually no one expects a move then, but the widespread expectation is that it will begin easing at its following meeting in September.
The yield on the 10-year Treasury fell to 4.16% from 4.19% late Friday and from 4.70% in April.
In stock markets abroad, Japan’s Nikkei 225 index jumped 2.1%. Its central bank will also announce a decision on interest rates this week. Expectations there, though, are for it to raise interest rates.
Indexes rose 1.3% in Hong Kong and were roughly flat in Shanghai after official data on Saturday showed industrial profits rose 3.5% in the first half of 2024 from a year earlier. That was a glimmer of positive news following recent cuts to interest rates and other piecemeal stimulus that followed a top-level policy meeting of the ruling Communist Party earlier this month.
The FTSE 100 rose 0.7% in London ahead of a meeting for the Bank of England where some investors expect to see a cut in interest rates.
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AP Business Writer Matt Ott contributed.
