U.S. stocks were set to resume their record climb on Tuesday as investors weighed concerns about a pullback ahead of a speech by Federal Reserve Chairman Jerome Powell.
The S&P 500 (^GSPC) rose 0.2% after the index posted its 35th record close of the year on Monday, while the tech-heavy Nasdaq Composite (^IXIC) led the way higher with a gain of about 0.3% after its own record close the day before. The Dow Jones Industrial Average (^DJI) remained the only major index in the red, down about 0.1%.
Stocks have hit new record highs as signs of a slowing U.S. economy bolster bets on interest rate cuts.
Powell is expected to shed light on the Fed’s outlook for the economy when he delivers his semiannual monetary policy report to Congress, starting Tuesday with an appearance in the Senate. Testimony before the House of Representatives will come the following day, setting the stage for a key update on consumer inflation on Thursday — all potential catalysts for stocks if they confirm a cooling.
But a note of caution is filtering through the market as the idea of a summer pullback gains more support, with Morgan Stanley strategist Mike Wilson forecasting a 10% correction.
Wall Street is getting nervous about the upcoming earnings season, given the higher expectations it faces this time around. At the same time, investors are starting to question the huge capital inflows into AI-linked stocks that have fueled the recent rally, given that the technology’s impact is still unproven.
On the corporate front, U.S.-listed shares of BP (BP) fell about 5% in early trading after the energy giant warned of a decline in refining and a factory-linked writedown of as much as $2 billion. Meanwhile, Novo Nordisk (NVO) shares fell after Wegovy lost out to Eli Lilly’s (LLY) Mounjaro in an analysis of rival weight-loss drugs.
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