Stock Market Today: Mega-Cap Strength Buoys Stocks

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Stocks struggled for direction Monday. Market participants are cautious looking ahead to a busy batch of economic data. Most notable in this week's lineup is Friday's release of the Federal Reserve's preferred inflation measure, especially after the central bank last week forecast higher-for-longer interest rates.

The next inflation reading comes Friday morning with the August personal consumption and expenditures (PCE) index, which measures consumer spending. The latest readings on personal income and spending will also be released.

This confluence of economic reports, as well as the resumption of student loan repayments and a possible government shutdown could "create amplified market volatility," says Mark Hackett, chief investment officer of Nationwide. "Investors should brace for a week that could redefine market sentiment and strategy for the quarter ahead."

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Today, though, the price action was relatively muted with the major indexes bouncing between positive and negative territory throughout Monday's session. At the close, the Nasdaq Composite (+0.5% at 13,271), the S&P 500 (+0.4% at 4,337) and the Dow Jones Industrial Average (+0.1% at 34,007) were all modestly higher.

Amazon's $4 billion AI investment

Amid a relatively bare economic calendar, investors took in single-stock news. Amazon.com (AMZN) sparked several headlines after it announced a collaboration with Anthropic, an artificial intelligence (AI) startup. As part of the deal, Amazon will invest $4 billion in Anthropic, taking a minority stake in the firm. Meanwhile, Anthropic will use Amazon Web Services (AWS) as its primary cloud provider.

AMZN shares climbed 1.7% Monday, while fellow mega-cap stocks Apple (AAPL, +0.7%) and Nvidia (NVDA, +1.5%) also gained ground.

Williams-Sonoma (WSM) was another big mover with shares rising 11.6% after regulatory filings revealed Green Equity Investors increased its passive stake in the home goods retailer to 5%. Today's gains just add to the consumer discretionary stock's impressive year-to-date return, with WSM up roughly 36% vs a 13% return for the broader market.

Energy stocks keep climbing

Energy stocks were also a pocket of strength Monday, with the sector outperforming (+1.3%) even as U.S. crude futures fell 0.7% to $89.42 per barrel. Oil and gas companies Coterra Energy (CTRA, +2.0%) and EOG Resources (EOG, +2.5%) were two notable gainers.

"Energy stocks are now reasserting their market leadership after gasoline prices in August rose 10.5% in the Consumer Price Index (CPI) and a whopping 20% in the Producer Price Index (PPI)," says Louis Navellier, chairman and founder of Navellier & Associates. In addition to an acute inventory decline, "there is a diesel shortage again, especially in Europe, so the U.S. is exporting more distillates, which is causing the trade deficit to decline and boost gross domestic product (GDP) growth."

With over a decade of experience writing about the stock market, Karee Venema is the senior investing editor at Kiplinger.com. She joined the publication in April 2021 after 10 years of working as an investing writer and columnist at a local investment research firm. In her previous role, Karee focused primarily on options trading, as well as technical, fundamental and sentiment analysis.