S&P 500, Nasdaq gain as megacaps rebound; rate concerns prevail

© Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 11, 2023. REUTERS/Brendan McDermid/File Photo

By Ankika Biswas and Shashwat Chauhan

(Reuters) -The S&P 500 and the Nasdaq gained in choppy trade on Monday as most megacap stocks picked up steam, with investors keenly awaiting economic data and Federal Reserve policymakers' remarks throughout the week for clarity on the path for interest rates.

Apple (NASDAQ:AAPL), Tesla (NASDAQ:TSLA), Nvidia and Alphabet (NASDAQ:GOOGL) reversed their course to gain 0.4% to 1.5%. Amazon.com (NASDAQ:AMZN) advanced 1.7% on plans to invest up to $4 billion in the high-profile startup, Anthropic.

Uncertainty around the interest rate outlook, including a potential hike by year-end and expectations for fewer cuts next year, pushed the 10-year Treasury yield to a 16-year high, bruising major growth stocks last week.

Earlier in the day, the S&P 500 and the Nasdaq had dropped to their lowest level since June, while the Dow stooped to an over two-month low.

The indexes also eyed their first quarterly declines so far this year heading into the last days of September.

While energy jumped over 1% to lead gains among major S&P 500 sectors, utilities and real estate were the worst hit.

Investors will now monitor data on durable goods and the personal consumption expenditures (PCE) price index for August, second-quarter GDP, and remarks by Fed policymakers, including Chair Jerome Powell, through the course of the week.

"Anything that would cause investors to believe that we are close to the end of this rate-tightening cycle and not on the precipice of recession could make investors feel a little more confident," said Sam Stovall, chief investment strategist at CFRA Research.

"Because of worries over rising oil prices, rising dollar, rising interest rates, we could see some additional weakness in this traditionally soft seasonal period."

Traders' bets on the benchmark rate remaining unchanged in November and December stood at 79% and 63%, respectively, according to CME's FedWatch tool, with a 25-basis-point rate cut being priced in as early as March and growing to over 33% in June and July.

At 11:50 a.m. ET, the Dow Jones Industrial Average was down 16.18 points, or 0.05%, at 33,947.66, the S&P 500 was up 10.48 points, or 0.24%, at 4,330.54, and the Nasdaq Composite was up 42.62 points, or 0.32%, at 13,254.42.

Meanwhile, Chicago Fed President Austan Goolsbee in an interview on CNBC stressed on the need to brining inflation back to the 2% target, after some Fed policymakers last week warned of further hikes.

The CBOE volatility index, known as Wall Street's "fear gauge", hit its highest level in more than a month during the day.

Footwear maker Nike (NYSE:NKE) and sportswear retailer Foot Locker (NYSE:FL) lost 0.1% and 2.6%, respectively, after Jefferies downgraded both the stocks to "hold" from "buy".

U.S.-listed shares of Chinese firms dipped ahead of a week-long holiday in the world's second largest economy. Shares of Alibaba (NYSE:BABA), PDD Holdings, Baidu (NASDAQ:BIDU) and JD.com fell between 1.0% and 2.9%.

Declining issues outnumbered advancers for a 1.20-to-1 ratio on the NYSE and a 1.07-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week high and 41 new lows, while the Nasdaq recorded 24 new highs and 297 new lows.