Wall Street closed mixed on Monday, pulled down by tech and discretionary stocks. Investor sentiment was weighed down by profit-taking in technology stocks, rising geopolitical uncertainty and caution ahead of key economic data. Two of the three benchmark indexes ended in the red, while one ended in the green.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.3%, or 148.01 points, to close at 51,712.71. Fifteen components of the 30-stock index ended in negative territory, one remained unchanged, while 14 ended in positive.
The tech-heavy Nasdaq Composite fell 351.33 points, or 1.3%, to close at 26,166.6.
The S&P 500 lost 27.79 points, or 0.4%, to close at 7,472.79. Seven of the 11 broad sectors of the benchmark index closed in the green. The Communication Services Select Sector SPDR (XLC), the Consumer Discretionary Select Sector SPDR (XLY) and the Consumer Staples Select Sector SPDR (XLP) declined 3.8%, 2.3% and 0.7%, respectively, while the Real Estate Select Sector SPDR (XLRE) advanced 1.4%.
The fear gauge CBOE Volatility Index (VIX) increased 3% to 17.28. A total of 22.97 billion shares were traded on Monday, higher than the last 20-session average of 22.12 billion. Decliners outnumbered advancers by a 1.32-to-1 ratio on the NYSE and by a 1.33-to-1 ratio on the Nasdaq.
SpaceX Slumps on Debt Offering, Weighs on Nasdaq
SpaceX SPCX plunged 16.4% on Monday, marking its steepest single-day decline and becoming a major drag on the Nasdaq Composite. Investor sentiment was pressured after the Elon Musk-led company launched its first-ever debt offering, a move that raised concerns about future financing needs despite its strong balance sheet. The announcement prompted profit-taking following the stock’s strong post-IPO run, with shares still trading well above their $135 offering price.
The sharp selloff overshadowed the company’s disclosure that it held approximately $100.8 billion in cash and cash equivalents as of June 19. While the cash position highlighted SpaceX’s financial strength, investors focused on the implications of the debt issuance and valuation concerns after the stock’s recent gains. Given SpaceX’s significant market influence, the decline weighed heavily on technology stocks and contributed to a mixed performance across Wall Street.
AI Spending Concerns Trigger Tech Selloff
Wall Street’s artificial intelligence (AI)-driven rally hit a speed bump on Monday as investors grew increasingly concerned about the enormous costs associated with developing AI technologies. The sector came under pressure amid worries that technology companies are committing unprecedented amounts of capital to build AI infrastructure, including data centers, chips and computing networks, without clear visibility into the timing and magnitude of future returns.
