The major indexes lost their early momentum on Monday. So much for “buy the dip.”
The Nasdaq Composite was down 1.3% after opening higher. The S&P 500 was down 0.6%. The Dow was down 61 points, or 0.2%.
Among the hard-hit stocks include 2024’s highflyers like Palantir Technologies, Constellation Energy, and Vistra. The PHLX Semiconductor Sector dropped 1.5% suddenly. Traders may be selling recent winners, especially those tied to the AI trade this morning. That said, the rest of the market wasn’t far behind, as the Invesco S&P 500 Equal Weight ETF was down 0.3% and falling.
While it was encouraging to see the market open the day higher, the fact that such gains evaporated so fast signals Wall Street is still worried about the path forward for stocks. The Cboe Volatility Index, or VIX, just turned higher at 18.59. The VIX, a measure of implied volatility in the market, is approaching the 20 threshold that signals heightened volatility.
The market enters the week with Wall Street starting to worry about cracks in the economy, and how policies like tariffs and cuts to government spending could weigh on the market. Such worries sent stocks sliding from record levels on Thursday and Friday.
Though the economic calendar is light today, earnings reports and economic data in the days ahead could provide some clarity on the market’s next moves.
“Put plainly, over the past week and a half, investors have been confronted with some surprisingly soft economic data and anecdotally negative commentary on the consumer, and those disappointing reports are raising fears that all the policy-related uncertainty emanating from Washington is starting to cause a loss of momentum,” writes Sevens Report Research’s Tom Essaye.