Stocks looked set to slide on Monday, as investors tried to find fresh catalysts to extend this year’s market rally, which has led to the major indexes marking new highs.
Futures tracking the Dow Jones Industrial Average fell 127 points, or 0.3%. S&P 500 futures were 0.3% lower, and contracts tied to the Nasdaq 100 were down 0.2%.
The three gauges soared to record closing highs last week after the Federal Reserve cut interest rates for the first time since December, and signaled that more reductions could be on the way.
The challenge for Wall Street now is to find reasons to sustain the rally in what’s historically been a tough month for equities.
The main drivers this week could be a series of Fed speakers, with Chair Jerome Powell set to discuss his economic outlook tomorrow, as well as personal consumption expenditures data due Friday. The PCE is the Fed’s preferred inflation gauge, so a lower-than-expected reading could strengthen the case for further rate cuts.
“Stocks have been bucking the historical September weakness so far, thanks to an extremely favorable setup with Federal Reserve rate cuts, strong earnings, solid economic growth and muted inflation,” Rick Gardner, CIO of RGA Investments, said.
“The stock market’s strength is making it tougher to put new money to work, as valuations are rising, which makes it all the more important for investors to be selective,” he added.
The yield on the benchmark 10-year U.S. Treasury note climbed 1 basis point to 4.14% in early trading on Monday. Gold surged 1% to hit a fresh high of $3,743 an ounce, and the U.S. dollar was flat against a weighted basket of its peers.