U.S. Stocks Recover From Early Pullback But Still Close Mostly Lower

Following the rally seen over the two previous sessions, stocks showed a significant pullback during morning trading on Monday. The major averages staged a recovery attempt over the course of the afternoon but still finished the day in negative territory.

The tech-heavy Nasdaq dipped 31.28 points or 0.2 percent to 15,597.68 after falling as much as 1.0 percent in early trading. The S&P 500 fell 15.80 points or 0.3 percent to 4,942.81, while the narrower Dow remained more firmly in the red, closing down 274.30 points or 0.7 percent at 38,380.12.

The early weakness on Wall Street came as some traders looked to cash in on the rally seen to close out the previous week amid fading optimism about the likelihood the Federal Reserve will cut interest rates in March.

Fed Chair Jerome Powell reiterated the central bank is unlikely to cut interest rates next month during an interview with “60 Minutes” on Sunday.

Powell suggested the strength of the U.S. economy even amidst elevated rates will allow the Fed to proceed carefully.

“With the economy strong like that, we feel like we can approach the question of when to begin to reduce interest rates carefully,” Powell said.

“We want to see more evidence that inflation is moving sustainably down to 2 percent,” He added. “Our confidence is rising. We just want some more confidence before we take that very important step of beginning to cut interest rates.”

Following last week’s Fed meeting and Powell’s subsequent comments, the chances of a March rate cut have fallen to just a 16.5 percent, according to CME Group’s FedWatch Tool.

Stocks fell to their lows of the session as the Institute for Supply Management released a report showing U.S. service sector growth accelerated by more than expected in the month of January.

The ISM said its services PMI climbed to 53.4 in January from a downwardly revised 50.5 in December, with a reading above 50 indicating growth in the sector. Economists had expected the index to rise to 52.0 from the 50.6…