By Yasin Ebrahim
Investing.com – The S&P 500 and Dow cut intraday losses to close at record highs on Monday, as rising megacap tech stocks offset weakness in economically-sensitive cyclical stocks amid concerns about slowing global growth just a day ahead of a potential update on monetary policy from Federal Reserve Chairman Jerome Powell.
The S&P 500 rose 0.3% to a new record intraday high of 4,479.26. The Dow Jones Industrial Average gained 0.3%, or 110 points, to 35,625.40. The Nasdaq was down 0.20%.
Energy fell more than 1%, dragging the broader the market lower, as oil prices slumped on demand concerns after softer economic data from China triggered concerns about the global recovery.
"In the short term, concerns about the spread of the Delta variant in China, and the effects this will have on oil demand, are continuing to weigh on prices," Commerzbank (DE:CBKG) said in a note. "These concerns were additionally fueled by data published overnight in China: industrial production turned out to be significantly softer than anticipated."
In another sign of slowing growth, The August Empire State index fell to 18.3 from 43.0 in July, missing economists' estimates of 28.5.
Treasury yields slipped on global growth concerns, pushing banking stocks sharply lower. Declining interest rates are the enemy of banks as they reduces their net interest margin.
JPMorgan (NYSE:JPM), Goldman Sachs (NYSE:GS) and Bank of America (NYSE:BAC) slipped less than 1%.
But yields aren't expected to fall for a prolonged period because of a robust labor market, and the expected tightening of Federal Reserve monetary policy.
"We are not losing confidence in our view that US Treasury yields and the US dollar are headed higher. Labor market strength and a powerful wealth effect should prevent the same loss of confidence in other household measures that was seen in the University of Michigan survey," Morgan Stanley (NYSE:MS) said in a note, adding that the "Fed taper [is] on tap."
Industrials were above the flatline, however, as defense companies including Parker-Hannifin (NYSE:PH), L3Harris Technologies (NYSE:LHX), and Leidos (NYSE:LDOS) climbed.
Technology stocks, often a benefactor of falling yields, gained as megacap tech was mostly higher.
Microsoft (NASDAQ:MSFT, Facebook (NASDAQ:FB), and Apple (NASDAQ:AAPL), Google-parent Alphabet (NASDAQ:GOOGL), Amazon.com (NASDAQ:AMZN) were higher.
Sonos (NASDAQ:SONO), meanwhile, jumped 4% after a judge ruled that Alphabet's Google had infringed on some of the company's patents. An important ban could be imposed for some of Google's Pixel smartphones and Nest audio speakers.
In earnings news, oat milk producer Oatly (NASDAQ:OTLY) reported quarterly results that fell short of Wall Street estimates on both the top and bottom lines. The company also announced plans to boost oat base production, citing increased demand. Its share price was fell about 3%.
In other news, Tesla (NASDAQ:TSLA) fell more than 4% after the U.S. government launched an investigation into the safety of the electric automaker's driver assistance system after multiple of crashes during the last three years.
Looking ahead to Tuesday, investors will be watching for fresh clues on monetary policy, with a town hall by Powell that potentially could lay out the carpet for a further signal on tapering expected at the Jackson Hole, Wyo., symposium next week.