The data reinforced Fed bets on at least two more 25 basis point rate cuts between June and December, with traders seeing a slim one-third chance, according to LSEG data.“The Fed will likely take its time and absorb more data, especially given the noise we’ve seen in recent data due to the government shutdown,” said Skyler Weinand, chief investment officer of Regan Capital.
EARNINGS SEASON IN THE SPOTLIGHT The largest U.S. lender, JPMorgan, beat quarterly profit expectations as it unofficially kicked off reporting season.
However, shares fell 1.1% in choppy trading after the bank said a proposed cap on credit card interest rates would hurt U.S. consumers and the economy.
Other major banks, due to report later this week, are widely expected to post stronger quarterly results, helped by a rebound in dealmaking.
Shares of Delta Air Lines fell 2.6% as the midpoint of its 2026 earnings forecast fell short of analyst expectations.
Peer American Airlines lost 1%.
At 9:39 a.m., the Dow Jones Industrial Average fell 162.04 points, or 0.33%, to 49,428.16, the S&P 500 gained 3.13 points, or 0.04%, to 6,980.40 and the Nasdaq Composite gained 32.21 points, or 0.14%, to 6,980.40. 23,766.12.
As earnings season kicks off, the S&P 500 is hovering just under 30 points below the 7,000 mark, while the Dow Jones is about 400 points away from the historic 50,000 mark.
SMALL CAPS GET A NEW BID
Investors have largely shrugged off geopolitical sticking points, from Washington’s saber-rattling in Iran to the Greenland and Venezuela talks, opting instead for the wave of artificial intelligence optimism and upbeat earnings expectations that have driven the major indexes to new highs.
The energy sector rose 1% as oil prices soared on heightened concerns about major producer Iran and possible supply disruptions.
The high valuations of mega-caps have sent bargain hunters down the market cap ladder, fueling a rally that has sent the Russell 2000 up 6.2% in the first seven trading days of this year, while the S&P 500 is up 1.9% as of Monday’s close.
The index hit an all-time high that day and was poised for its fourth session of progress – the longest daily winning streak since late November.
“We’ve been seeing fits and starts in small caps for years. We need to see some more to believe that this is finally the time for small caps,” said Ryan Detrick, chief market strategist at Carson Group in Omaha.
Meanwhile, the US government will invest $1 billion in L3Harris Technologies’ rocket engine business, sending its shares up 2%.
Advancing issues outpaced declining issues by a 1.67-to-1 ratio on the NYSE and by a 1.09-to-1 ratio on the Nasdaq.
The S&P 500 posted 34 new 52-week highs and one new low, while the Nasdaq Composite posted 72 new highs and 19 new lows.
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