Dow Jones, S&P 500 end lower as investors await Powell testimony

U.S. stocks ended lower on Monday, pausing a rally after the S&P 500 logged its 16th winning week out of the last 18 and investors awaited a busy week that features congressional testimony by Federal Reserve Chair Jerome Powell and all-important jobs data.

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What happened

The S&P 500 rose 1% last week and has gained 7.6% this year, posting its 15th record finish of 2024 on Friday. The Nasdaq returned to record territory last week.

What drove markets

A busy slate of events this week could help investors determine whether anything can derail the rally. Powell will be on Capitol Hill this week for two days of congressional testimony , while the nonfarm-payrolls report gets released on Friday.

See: Stock rally, rate-cut forecasts face test from Powell testimony and jobs report

The recent rally in stocks has been driven mostly by investors responding to strong growth data, according to Bill Merz, head of capital markets research at U.S. Bank Wealth Management.

It may suggest that the combination of monetary and fiscal policies are “not that restrictive,” Merz said in a phone interview.

“If the S&P 500 is going to make this the eighth straight week it hits an all-time high, [investors] will likely need to hear encouraging words from Fed Chair Jerome Powell about rate cuts in his two days of congressional testimony and avoid any major surprises from this week’s jobs data,” Chris Larkin, managing director for trading and investing at E-Trade from Morgan Stanley, said in an email.

”The Fed has said it doesn’t need to see a significantly weaker labor market to cut rates, but if the numbers come in too hot, it could renew concerns about delays, at least temporarily,” Larkin said.

Atlanta Fed President Raphael Bostic said Monday that with the labor market strong and growth above trend, there isn’t pressure on the U.S. central bank to cut interest rates.

“The good news is the labor market and economy are prospering, furnishing the [Federal Open Market Committee] the luxury of making policy without the pressure of urgency,” Bostic said in an essay posted on his regional bank’s website.

Story continues

Bostic, who is a voting member of the Fed’s interest-rate committee, quickly added that this could change.

Meanwhile, Bank of America became the latest Wall Street firm to lift its price target for the S&P 500, now forecasting that the index will see a year-end level of 5,400 . The increased price target nonetheless was accompanied by a warning that the likelihood of a near-term pullback is high.

And it’s more than just U.S. stocks rallying: Bitcoin BTCUSD surged past $67,000 and Japan’s Nikkei 225 JP:NIK zoomed past 40,000 .

Companies in focus

Steve Goldstein contributed.

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