Markets Stall as Tech Stocks Weigh Down S&P 500, Nasdaq

The S&P 500 closed with minimal changes while the Nasdaq fell, driven by declines in technology stocks. Concerns over Apple's iPhone demand and chipmakers' performance contributed to the drop. Amid market volatility, investors speculate on the Federal Reserve's upcoming rate cut. Financial and energy stocks were among the few gainers.

The S&P 500 closed almost unchanged while the Nasdaq saw a decline on Monday, heavily impacted by a drop in technology stocks. Investors are weighing the possibility of an upsized rate cut from the U.S. Federal Reserve expected this week.

Apple significantly impacted both the S&P and Nasdaq indexes, following reports from TF International Securities indicating lower-than-expected demand for its iPhone 16 models. This concern also negatively affected chipmakers, with Nvidia, Broadcom, and Micron Tech all posting losses, pushing the Philadelphia SE Semiconductor index down by about 1.5%.

"If people want to raise a lot of money quickly, how do they do it? They go sell the names that they can sell really quickly without necessarily destroying it. So you can sell Apple, you can sell Nvidia, you can sell Amazon, you can sell Microsoft very quickly and raise a lot of cash," said Ken Polcari, chief market strategist at SlateStone Wealth. "They want to do it in front of the Fed in case they're getting nervous or they want to raise cash to just have cash available to put to work."

Preliminary data showed the S&P 500 gained 7.62 points (0.11%) to finish at 5,633.64, while the Nasdaq Composite dropped 89.66 points (0.51%) to 17,594.32. The Dow Jones Industrial Average rose significantly by 238.02 points (0.58%) to 41,631.80. Among the 11 major S&P sectors, only tech and consumer discretionary stocks declined, while financials and energy performed the best.

Market momentum since early this year has been driven by expectations of the Federal Reserve loosening its monetary policy, with data suggesting a recession could be avoided. The Dow reached an intraday record high on Monday, while the S&P 500 is now less than 1% away from its closing record set in July.

Volatility surrounding expectations for the Fed's rate cut, scheduled to be announced on Wednesday, remains high. The market currently sees a 59% chance for a 50-basis-point cut, according to CME's FedWatch Tool. Intel Corp surged following a report that it qualified for up to $3.5 billion in federal grants to produce semiconductors for the U.S. Department of Defense.

Boeing, however, declined after announcing it was freezing hiring and contemplating temporary furloughs amid an ongoing worker strike.

(With inputs from agencies.)