By Johann M Cherian and Noel Randewich
(Reuters) -The S&P 500 finished lower on Monday, with AI heavyweight Nvidia (NASDAQ:NVDA) dipping ahead of its quarterly report this week, while investors awaited inflation data for clues about the path of interest-rate cuts by the Federal Reserve.
The tech-heavy Nasdaq also declined, but the Dow Jones Industrial Average was supported by gains of about 1% each in Caterpillar (NYSE:CAT) and American Express (NYSE:AXP) and finished just slightly up.
Nvidia dropped 2.25% ahead of its report on Wednesday in what is set to be the U.S. stock market's most closely watched event of the week.
Some investors worried that anything short of a stellar forecast from Nvidia could shatter Wall Street's rally in AI-related companies, including Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL) and Meta Platforms (NASDAQ:META).
"Nvidia could disappoint. I think when you get to the point where the majority doesn't even suspect that there could be a piece of bad news, that's typically where you get it," warned Jake Dollarhide, chief executive of Longbow Asset Management in Tulsa, Oklahoma.
U.S.-listed shares of PDD Holdings tumbled almost 29% after the Temu-owner missed market expectations for second-quarter revenue.
Tesla (NASDAQ:TSLA) lost 3.2% after Canada, following the lead of the U.S. and European Union, said it would impose a 100% tariff on imports of Chinese electric vehicles.
The S&P 500 declined 0.32% to end the session at 5,616.84 points.
The Nasdaq declined 0.85% to 17,725.77 points, while Dow Jones Industrial Average rose 0.16% to 41,240.52 points.
Of the 11 S&P 500 sector indexes, six declined, led lower by information technology, down 1.12%, followed by a 0.81% loss in consumer discretionary.
The energy sector index jumped 1.11% following reports of oil supply disruptions amid the geopolitical conflict in the Middle East lifted crude prices. [O/R]
Boeing (NYSE:BA) slipped 0.85% after NASA picked SpaceX over the planemaker's Starliner to return its astronauts from space next year.
Wall Street rallied on Friday, with the S&P 500 nearing record highs after Fed Chair Jerome Powell said "the time has come" to lower borrowing costs in the light of a diminishing upside risk to inflation and moderating labor demand.
Money markets suggest traders see a 70% chance of a 25 basis point interest rate cut and a 30% chance of a 50 basis point cut in September, according to the CME Group's (NASDAQ:CME) FedWatch tool.
Friday's highly anticipated Personal Consumption Expenditure data for July, the central bank's preferred inflation gauge, could provide more insight into the policy easing trajectory.
Results from Dell (NYSE:DELL), Salesforce (NYSE:CRM), Dollar General (NYSE:DG) and Gap are on tap this week.
Advancing issues outnumbered falling ones within the S&P 500 by a 1.1-to-one ratio.
Across the U.S. stock market, declining stocks outnumbered rising ones by a 1.2-to-one ratio.
Volume on U.S. exchanges was relatively light, with 9.5 billion shares traded, compared to an average of 11.9 billion shares over the previous 20 sessions.