Index Pulls Back After Friday’s Fed-Fueled Rally

Major U.S. equities indexes lost ground to start the trading week after Friday’s rally as investors looked ahead to Wednesday’s quarterly earnings report from AI chipmaker Nvidia (NVDA) and an update on the Federal Reserve’s favored measure of inflation. 

The S&P 500 slipped 0.4%, while the Dow was down 0.8%. After trading in positive territory for much of the session, the tech-heavy Nasdaq ran out of steam in the afternoon to close with a loss of 0.2%. 

Keurig Dr Pepper (KDP) shares dropped nearly 12%, falling the furthest of any stock in the S&P 500. The move lower came after the company announced a plan to buy Netherlands-based coffee company JDE Peet’s and then split its coffee and beverage businesses into two separate entities, effectively unwinding the 2018 merger between coffee company Keurig and the soft drink maker Dr Pepper. Analysts at S&P placed a negative credit outlook on Keurig Dr Pepper following the announcement, indicating that the roughly $18 billion Peet’s deal would increase its debt levels.

Shares of DexCom (DXCM), a manufacturer of continuous glucose monitoring devices to help patients managing diabetes, slipped close to 8%. Although the medical device company reported better-than-expected sales and profits in its late-July earnings report and raised its full-year sales outlook, its adjusted gross margin fell from a year ago, reflecting increased spending on research and development as well as selling, general, and administrative costs. The stock has been trending downward since the earnings release, and including Monday’s decline, DexCom shares have lost around 15% in the past month.

Vaccine makers faced pressure on Monday following reports suggesting that Human Services Secretary Robert F. Kennedy Jr. and President Donald Trump could be poised to ban COVID vaccines within the next several months. Although the White House dismissed the claims of an impending prohibition of the vaccine, an advisor and key Kennedy ally reportedly said there could be a gradual phase-out or a swift end to COVID vaccinations, despite the probability of legal challenges and uneasiness among the public. Moderna (MRNA) shares slid 6.5% on Monday. 

Deckers Outdoor (DECK) shares rose 3.6% to log the top daily performance in the S&P 500, extending gains posted by the footwear maker’s stock late last week. The move higher has come in the footsteps of several new product launches for Deckers’ Teva brand, including a new autumn and winter collection as well as a collaboration with streetwear designer Sean Wotherspoon.

Crude oil futures ticked higher at the start of the trading week amid concerns that Ukraine’s attacks on Russian oil facilities and the possibility of additional U.S. sanctions on Russia could pressure supplies. Shares of exploration and production giant APA Corp. (APA) added 3.3%.

Shares of data storage firm Seagate Technology (STX) climbed 3% after Cantor Fitzgerald reiterated its “overweight” rating on the stock. The analysts said they expect the maker of external hard drives and solid state drives to benefit from positive supply and demand dynamics, contributing to strong pricing that could help Seagate improve its gross margin. Shares of data storage competitor Western Digital (WDC) added 2.9%.