NEW YORK (`) — U.S. stocks rebounded from record levels on Monday as they head into the final stretch of what appears to be their final month of success.
The S&P 500 slipped 19.27 points, or 0.4%, to 5,069.53 after closing at an all-time high last week. The Dow Jones Industrial Average fell 62.30, or 0.2%, to 39,069.23, and the Nasdaq Composite fell 20.57, or 0.1%, to 15,976.25.
Berkshire Hathaway was one of the market's heaviest weights, even as Warren Buffett's company reported better results for the end of 2023 than analysts expected. Class B shares of the company, whose subsidiaries include GEICO, Fruit of the Loom and Brooks running shoes, initially rose more than 3% but later fell to a loss of 1.9%.
The famous investor warned shareholders not to expect any further “mind-blowing performances” as there were no bargains in the market big enough to make a meaningful difference. Buffett is known for buying companies when they are cheap.
This follows widespread criticism from some financial analysts that prices across Wall Street had surged too high in their big run-up since Halloween.
The S&P 500 is on track to complete its fourth straight month of success and is coming off its 15th winning week in the last 17 years. And the stock market may not have been cheap, even when it bottomed in October 2022. That marked the most expensive bear market bottom in history, by some measures of stock prices relative to corporate earnings, says Doug Ramsey, Leuthold's chief investment officer.
This latest rally began last October on hopes that inflation would cool enough that the Federal Reserve could cut interest rates several times this year. Such cuts would ease pressure on the economy and financial system while increasing investment prices.
Expectations that interest rate cuts will finally come this year are still high, but traders have shifted their forecasts after some stronger-than-expected economic reports. These data are now raising hopes that companies' earnings growth can strengthen, which will also benefit share prices.
Domino's Pizza rose 5.8%, posting one of the biggest gains in the S&P 500, after the company reported profit for the final three months of 2023 that beat analysts' expectations.
Amazon shares fell 0.1% on their first day as a member of the Dow Jones Industrial Average. It replaced Walgreens Boots Alliance, which fell 3.4%.
Homebuilder stocks were mixed after a report showed new home sales rose less than economists expected last month. Toll Brothers rose 1.1% and Lennar fell 0.6%.
Intuitive Machines lost more than a third of its value after the company announced that its lunar lander may stop working on Tuesday after landing sideways near the moon's south pole. However, the 34.6% decline only diminishes what has been a moonshot for the stock so far this year. It is still up 145.4% since the end of 2023.
Last week, stocks enjoyed a big boost after another stunning report from Nvidia added to the excitement already surrounding artificial intelligence technology. Nvidia, whose chips power AI technologies, rose another 0.3% on Monday and is already up nearly 60% so far this year.
Earnings reporting season is coming to an end for the big companies in the S&P 500, but there are still updates from several big names this week. There are several that could shed light on how well U.S. household spending is holding up. Such spending has been a key reason the U.S. economy has exceeded expectations of a possible recession.
Best Buy, Lowe's and TJX, the parent company of TJ Maxx and Marshalls, will all report this week. This also applies to several large technology companies, including Salesforce.com and HP.
Turning to the economic calendar, the US government will release the latest update on the Federal Reserve's preferred measure of inflation on Thursday. Typically, this is a less detailed report as consumer and wholesale inflation data for the month has already been released.
However, those reports came hotter than economists expected, which could lead to more volatility this time around. The hope on Wall Street is that inflation continues to cool quickly enough to convince the Federal Reserve to start cutting interest rates starting in June.
Treasury yields rose in the bond market. The yield on the 10-year Treasury note rose to 4.27% from 4.25% late Friday.
On overseas stock markets, indices were mixed. Japan's Nikkei 225 gained 0.3%, setting another record after recouping recent losses suffered when its “bubble” burst at the end of 1989.
Inventories were lower across much of Asia and patchy across much of Europe.
` business reporters Yuri Kageyama and Matt Ott contributed.
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