S&P 500 falls Monday as Wall Street takes a breather after its best week since June

The S&P 500 traded lower Monday after it posted its biggest weekly gain in almost five months on the back of easing inflation data.

The broad-market index declined 0.6%, and the tech-heavy Nasdaq Composite slid 1.2%. The Dow Jones Industrial Average wavered over the flat line.

The S&P tech sector was down by about 1%, after posting its best week since April 2020 in the previous session.

The S&P 500 rallied 5.9% to finish the previous week, its best weekly advance since June. Investors cheered a lighter-than-expected inflation reading, betting that the Federal Reserve would soon slow its aggressive tightening campaign. The tech-heavy Nasdaq Composite gained 8.1% last week for its best week since March. The blue-chip Dow advanced 4.2%.

“A notable shift has occurred in the market, with investors increasingly risk-on across asset classes,” said Mark Hackett, Nationwide’s chief of investment research. “Technical indicators have improved dramatically, with investor sentiment, momentum, breadth, and risk factors all showing notable improvement.”

Still, the Federal Reserve has given little signal that it could deviate from its tightening path anytime soon. Fed Governor Christopher Waller said Sunday that, “We’re at a point we can start thinking maybe of going to a slower pace.” But, “we’re not softening. … Quit paying attention to the pace and start paying attention to where the endpoint is going to be. Until we get inflation down, that endpoint is still a ways out there.”

The third-quarter earnings season is set to continue, with a heavy emphasis on retail. Big retailers Walmart, Home Depot, Target, Lowe’s, Macy’s and Kohl’s are all slated to post numbers this week.