US close: Dow, S&P 500 pull back from peaks ahead of key data

(Sharecast News) - US stocks finished with small losses on Monday, as early gains were quickly erased with the Dow Jones Industrial Average and S&P 500 both retreating from record highs ahead of a busy week for economic data. The Dow fell 0.16% from the 39,131.53 all-time closing high reached last Friday, while the S&P 500 slipped 0.38% after hitting a new peak of 5,088.8. The Nasdaq, which continues to trade close to its highest-ever level, also slipped 0.13%.

Dragging on markets on Monday was a retreat by heavyweight tech stocks, which performed well over recent days following Nvidia's barnstorming earnings report last week, with the chip maker lifting sentiment across the sector. Nvidia, which has jumped 17% over the past two days, finished broadly flat, but Amazon, Apple, Microsoft and Alphabet all finished in the red.

The macroeconomic calendar was relatively light, with new home sales being the only major publication. New home sales rose 1.5% in January, according to the Census Bureau, hitting a seasonally adjusted annualised rate of 661,000. While that fell short of market expectations for a reading of 680,000.

Ryan Sweet, chief US economist at Oxford Economics, said that the slight miss in sales shouldn't be a concern since the weather likely dampened sales, particularly in the South. What's more, January's levels are above their average for the fourth quarter of 2023 and should provide a boost to the economy in the first quarter or 2024.

"The outlook for new-home sales remains cautiously optimistic as the 30-year fixed mortgage rate is off its recent peak, job growth is strong, and inventories are not problematic for the new-home market," Sweet said.

In other stock movements, Domino's Pizza was a high riser after hiking its dividend by 25% and upping its share buyback programme by $1bn. The pizza restaurant and delivery chain reported profits ahead of expectations and cited its "Emergency Pizza" promotion which helped increase active rewards programme members by 10%.

Aluminium giant Alcoa fell sharply as investors gave a negative reaction to its announced acquisition of Australian firm Alumina Limited for $2.2bn.

]Pharma group Moderna was also out of favour after analysts at HSBC cut the stock from 'hold' to 'reduce.

Things are set to pick up on the macro front this week, with durable goods order, consumer confidence, GDP and manufacturing PMIs due, but the headline-grabbing release will be the all-important personal consumption expenditures (PCE) index on Thursday.

The year-on-year change in the PCE index, the Federal Reserve's preferred gauge of inflation, is expected to show that price growth eased to 2.4% in January from 2.6%, with the core annual rate tipped to slow to 2.8% from 2.9%.

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