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(Reuters) – U.S. stocks closed lower on Monday, as investors were wary of making riskier bets after Russia’s aborted weekend mutiny.
Investors were uncertain about the implications of the rebellion by Russian mercenaries that raised questions about President Vladimir Putin’s future. While Putin on Monday thanked mercenary fighters and commanders who had stood down to avoid bloodshed, the U.S. State Department said the situation in Russia remains dynamic.
Growth stocks weighed the most on the main indexes, with Meta Platforms Inc (NASDAQ:META), Alphabet (NASDAQ:GOOGL) Inc and Tesla (NASDAQ:TSLA) Inc falling sharply.
Last week, U.S. stocks sputtered after a recent rally, with the tech-heavy Nasdaq snapping its eight-week winning streak after Fed Chair Jerome Powell signaled there could be more interest rate hikes ahead.
“It doesn’t feel like the all clear has sounded yet,” said Carol Schleif, chief investment officer at BMO family office in Minneapolis. “Nobody knows what the ultimate power structure in Russia’s going to look like.”
“Traders are having a tough time today figuring out if they want to be offensive or defensive so they’ve got a foot in both camps. They don’t know which way the market’s going to swing,” she said.
With this uncertainty in mind Schleif noted that investors were taking some profits in growth stocks that had advanced sharply this year.
And they were checking out underdogs for the year-to-date such as value stocks and small caps, said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, Charlotte, North Carolina.
“Out of favor themes for 2023 are working for today. Maybe in the absence of a real risk on or risk off day you go bargain hunting,” Zaccarelli said.
According to preliminary data, the S&P 500 lost 18.90 points, or 0.43%, to end at 4,329.43 points, while the Nasdaq Composite lost 156.74 points, or 1.16%, to 13,335.78. The Dow Jones Industrial Average fell 6.69 points, or 0.02%, to 33,720.74.
But the S&P 500 energy sector gained as oil prices rose while investors balanced concerns about global demand growth against upcoming supply disruptions that could get exacerbated by political instability in Russia. [O/R]
A slew of economic data including a key inflation gauge, durable goods and University of Michigan’s consumer sentiment index is expected this week, as well as Powell’s speech that could throw light on Fed’s rate hike plans.
Most policymakers see at least two more quarter-point rate increases by the end of this year, though traders expect one more hike in July and see the U.S. central bank holding rates steady through the end of 2023, according to CMEGroup’s Fedwatch tool.
Among single stocks, Pfizer Inc (NYSE:PFE) fell after the drugmaker said it is discontinuing the development of an experimental obesity and diabetes drug due to elevated liver enzymes in patients in clinical studies.
Alphabet fell after UBS downgraded the stock to “neutral,” while Tesla slipped dropped after Goldman Sachs (NYSE:GS) cut the electric car maker’s rating to “neutral.”
Lucid Group rose after entering into an agreement with UK’s Aston Martin that will give the electric vehicle maker a 3.7% stake in the company.
PacWest climbed after private-equity firm Ares Management (NYSE:ARES) said it had acquired a $3.5 billion specialty finance loan portfolio from the lender.
But Carnival (NYSE:CCL) slumped after the cruise operator forecast third-quarter earnings below Wall Street expectations.
