On Monday, Wall Street’s main indexes experienced declines as Treasury yields rose following Federal Reserve Chair Jerome Powell’s firm stance against market speculations of imminent rate cuts. Powell emphasized the need for more evidence of a sustainable downtrend in inflation to justify lower rates. Minneapolis Fed President Neel Kashkari also indicated that a resilient economy could delay rate cuts. The Institute for Supply Management’s data showed that the U.S. services sector’s growth increased in January, with input prices reaching an 11-month high. The rise in U.S. Treasury yields, particularly the two-year yield reaching a one-month high of 4.48%, contributed to the market’s unease.

Investors were concerned about the possibility of the economy being too strong, leading to fewer rate cuts later on. Traders anticipated a 67% chance of at least a 25-basis-point rate cut in May and a nearly 94% chance in June, according to the CME FedWatch Tool. The market also took a breather after recent record highs in the benchmark S&P 500 and the Dow, driven by positive results from Meta Platforms (NASDAQ:META) and Amazon (NASDAQ:AMZN). Caterpillar (NYSE:CAT) saw a 1.2% increase after reporting higher quarterly profit, while Estee Lauder (NYSE:EL) surged 14.6% with plans to cut a percentage of its workforce. The Dow Jones Industrial Average was down 0.66%, the S&P 500 fell 0.41%, and the Nasdaq Composite dropped 0.45%.

The S&P 500 materials sector was particularly affected, down 2.6%, with Air Products (NYSE:APD) experiencing a 15.3% decline after forecasting 2024 profit below estimates. Boeing (NYSE:BA) fell 2.1% due to a new quality glitch in some 737 MAX planes, impacting deliveries. Tesla (NASDAQ:TSLA) lost 3.4% after a price target cut, and Nvidia (NASDAQ:NVDA) rose 4% to a record high following a target raise by Goldman Sachs. Catalent (NYSE:CTLT) soared 10.0% to an all-time high on plans for Novo Nordisk (NYSE:NVO) parent Novo Holdings to acquire the contract drugmaker in an $11.5-billion all-cash deal. Declining issues outnumbered advancers significantly on both the NYSE and Nasdaq.

The S&P index recorded 19 new 52-week highs and nine new lows, while the Nasdaq recorded 30 new highs and 98 new lows. The market’s current focus includes ongoing discussions about potential rate cuts, economic data, and corporate earnings reports.