US stocks declined on Monday following a strong performance last week, during which the Dow Jones Industrial Average and S&P 500 closed at record highs.
The Dow fell 161 points, or 0.3%, while the S&P 500 slipped 0.2% and the Nasdaq Composite lost 0.1%.
The small-cap Russell 2000 also pared gains after posting its first record close since November 2021.
Investor sentiment was weighed down by the growing risk of a government shutdown.
This week, historically the weakest for the S&P 500 per Citadel, will see the release of the Fed’s preferred inflation gauge, the personal consumption expenditures (PCE) price index.
Economists expect inflation to remain subdued, supporting the Fed’s current policy stance.
Last week, the Senate rejected both Republican and Democratic proposals to temporarily fund the federal government.
Senate Democratic Leader Chuck Schumer has urged President Donald Trump to meet with Democrats to negotiate a deal before the September 30 funding deadline.
Fed policy and market expectations
Last week also saw the Federal Reserve cut interest rates by a quarter percentage point, its first reduction since December.
The move, widely anticipated by markets, was interpreted as a dovish tilt amid signs of a slowing labour market.
Markets are now pricing in two additional quarter-point cuts before the end of the year, according to the CME FedWatch Tool.
Investors are closely monitoring upcoming macroeconomic data to assess whether the expected path of monetary easing remains on track.
Atlanta Federal Reserve President Raphael Bostic said he does not currently see a need for further interest rate reductions this year, citing inflation concerns. “I am concerned about the inflation that has been too high for a long time,” Bostic told the Wall Street Journal.
“And so I today would not be moving or in favor of it, but we’ll see what happens,” he added.
Optimism from Goldman Sachs
Amid these cautious signals, Goldman Sachs raised its annual S&P 500 target to 6,800, up from its previous forecast of 6,600.
Analysts cited steady economic growth, resilient corporate earnings, and strong consumer demand and business investment as factors supporting further gains.
While investors welcomed the upward revision, some remain wary of risks including potential interest rate increases and geopolitical tensions. Overall, the new target reflects confidence in the market’s ability to navigate ongoing challenges.
The post US stocks open in the red: S&P 500 slips 0.2%, Dow down over 150 points appeared first on Invezz
