Technology and health care companies drove U.S. stocks to a lower finish Monday as the market fell for a second straight day following a run of record highs.
The selling came amid growing speculation on Wall Street that an unexpectedly strong pickup in U.S. employment growth last month may keep the Federal Reserve from aggressively cutting its benchmark interest rate. Many investors still expect a cut of a quarter percentage point, but fewer are now expecting a half-point reduction.
The market rallied through much of June after the central bank signaled it’s prepared to lower interest rates to offset slowing global growth and the fallout from U.S. trade conflicts. The benchmark S&P 500 index closed at record highs three days in a row last week before stumbling Friday following a report that showed U.S. employers added a robust 224,000 jobs in June and stoked uncertainty about the Fed’s next move on interest rates.
The S&P 500 fell 14.46 points, or 0.5 percent, to 2,975.95. The index is now about 0.7 percent below its all-time high set Wednesday.
The Dow Jones Industrial Average slid 115.98 points, or 0.4 percent, to 26,806.14. The Nasdaq composite lost 63.41 points, or 0.8 percent, to 8,098.38. The Russell 2000 index of smaller company stocks dropped 14.24 points, or 0.9 percent, to 1,561.39.
The Fed’s benchmark interest rate currently stands in a range of 2.25-2.5 percent, and the central bank has not cut rates since the Great Recession in 2008. Last year, Fed officials raised rates four times, in part to stave off the risk of high inflation and in part to try to ensure they would have room to cut rates if the economy stumbled.
On Friday, the Fed emphasized it would act as necessary to sustain the economic expansion, while noting that most Fed officials have lowered their expectations for the course of rates. The Fed’s statement came in its semiannual report on monetary policy.
Investors will be listening closely for any hints on the central bank’s interest rate policy Wednesday and Thursday, when Powell delivers the Fed’s semi-annual monetary report to Congress.
Besides keeping an eye on the Fed and on any developments with the ongoing trade talks between the U.S. and China, investors are looking ahead to the flood of earnings reports that companies are set to begin releasing later this month.
Expectations are generally low, and this could be the first time in three years that S&P 500 companies report a back-to-back decline in overall earnings, according to FactSet.
Technology and health care stocks led the market’s slide Monday. Apple dropped 2.1 percent and Cardinal Health slid 1.5 percent. Communication services companies also declined broadly. Google parent Alphabet fell 1.4 percent and TripAdvisor lost 4.3 percent.