At a Glance

• The Dow fell 0.3% and the S&P 500 slipped 0.1% on Monday, while the Nasdaq edged slightly higher.
• More than 350 S&P 500 stocks declined even as the index hovered near breakeven, with technology the only sector rising.
• Chip stocks led the gains, with the iShares Semiconductor ETF up 2.7%.
• Walmart, Target, Home Depot, and Lowe's are among the major retailers reporting earnings this week.
• Traders cut the odds of a September Fed rate hike to below one-third as economic data stays mixed.

U.S. stocks opened the week on uneven footing on Monday, with the major indexes pointing in different directions as Wall Street digested a busy stretch ahead of retail earnings. The Dow Jones Industrial Average dropped roughly 165 points, or 0.3%, at the open, while the S&P 500 slipped 0.1% after logging its third straight weekly gain. The Nasdaq Composite edged up 0.2%, lifted by strength in chip stocks.

Weaker Beneath the Surface

The headline numbers understated the breadth of Monday's pullback. More than 350 stocks in the S&P 500 were in the red even as the index itself hovered near breakeven. The Invesco S&P 500 Equal Weight ETF, which treats every stock equally rather than weighting by market value, fell 0.6% — a gap that lays bare how top-heavy the index's gains have become.

Technology was the only S&P 500 sector rising on the day. The iShares Semiconductor ETF jumped 2.7%, while ETFs tracking software stocks and the Magnificent Seven — Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta, and Tesla — both moved lower. Semiconductors sit at the hardware layer of the AI buildout, and data-center demand has been the dominant growth driver for the industry's largest chipmakers, which is why the group frequently trades as a proxy for AI sentiment. Wall Street appears to be rotating back into AI-related names during the lull, and the rest of the market is not keeping pace.

Retail Earnings and Fed Policy in Focus

Investor attention this week falls squarely on retail earnings. Walmart, Target, Home Depot, and Lowe's are all set to report quarterly results, and those numbers will give a clearer picture of consumer spending during the back-to-school season. Walmart and Home Depot are also Dow components, so their results can move the blue-chip average directly. And with consumer spending accounting for roughly two-thirds of U.S. economic output, the big-box reports double as a check on the broader economy, not just on individual retailers.

Traders also pulled back expectations for a September rate hike at the Fed's Jackson Hole gathering, the Kansas City Fed's annual symposium in Wyoming that investors watch closely for signals about the policy path. Odds dropped to less than one-third as recent inflation and jobs data have continued to send mixed signals. The Federal Open Market Committee's meeting minutes are due Wednesday and could offer more detail on where Fed officials stand on future rate decisions.

Oil prices are also part of the mix. Brent crude futures edged up to $88 per barrel on Monday as the United States continues to factor energy into its approach to the conflict in the Middle East — worth noting because energy feeds directly into headline inflation readings. Treasury yields, meanwhile, kept climbing, with both the 10-year and 30-year yields extending recent gains on concerns about the growing national debt; longer-dated yields serve as the baseline for borrowing costs from mortgages to corporate debt.

The Week Ahead

The S&P 500 came into Monday fresh off its third consecutive weekly gain, but the session suggests that momentum may be fading outside of a narrow group of tech and chip names. With no major economic data releases scheduled until the Fed minutes arrive on Wednesday, earnings from the big-box retailers are likely to set the tone for markets in the days ahead.