S&P 500 Flat After Hitting Record as Energy Slumps By Investing.com

By Yasin Ebrahim

Investing.com – The S&P 500 was flat Monday after hitting fresh record highs as gains in tech were offset by an oil-led slump in energy ahead of a meeting by major oil producing nations later this week.

The S&P 500 fell 0.1% after hitting a record high of 4,287.90. The Dow Jones Industrial Average slipped 0.62%, or 212 points, the Nasdaq was up 0.60%. 

Energy slipped more than 3% as oil prices came under pressure ahead of the OPEC meeting Thursday. Major oil producers are expected to decide to increase production by 500,000 barrels per day from August, following the planned production hike by 800,000 barrels per day in July.

”If OPEC+ signals its willingness to produce more oil in the future, the price rally on the oil market should come to an end for the time being,” Commerzbank (DE:CBKG) said in a note.

Financials were one of the biggest decliners on the day following a slump in regional banks as falling bond yields soured investor sentiment on the sector.

People’s United Financial (NASDAQ:PBCT), Regions Financial Corporation (NYSE:RF) and Huntington Bancshares (NASDAQ:HBAN) led the downside, with the latter lower by more than 2%.

Lower interest rates hurt the return on interest that banks earn from their loan products, or net interest margin – the difference between the interest income generated by banks and the amount of interest paid out to depositors.

The ongoing weakness in U.S. government yields helped pave the way for another wave of buying pressure in tech.

Apart Google-parent Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT, Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB) and Amazon.com (NASDAQ:AMZN) were in the green.

Tech was also pushed higher by a jump in chip stocks with Nvidia (NASDAQ:NVDA) leading the charge, jumping 5% after the chipmaker reportedly received support for its planned $40 billion takeover of ARM from the latter’s customers including Broadcom (NASDAQ:AVGO).

The fall in U.S. government bond yields boosted demand for consumer staples and utilities, commonly used as a bond proxy given the sector’s steady dividends.

Boeing (NYSE:BA), down 3%, dragged the broader industrials sector lower on a CNBC report, citing a letter from a Federal Aviation Administration official to Boeing, suggesting the aircraft maker is unlikely to receive certification for its 777X long-range aircraft until mid-to-late 2023 at the earliest.

The malaise in the broader market comes as some warn that stocks are in overbought territory and may face a correction in the near future.

“[W]e remain on guard for another potential cycle of profit taking / consolidation in stocks ahead,” said Mark Luschini, chief investment strategy at Janney Montgomery Scott. “We still believe such a corrective wave can materialize as we make our way into the 3rd QTR, with October in Q4 traditionally offering up some of the market’s most notoriously volatile periods as well,” Luschini added.