The S&P 500 and the Nasdaq gave up early gains and declined in choppy trading on Monday, as investors awaited results from chip giant Nvidia for clues on the future of demand for artificial intelligence technology.
Most megacap stocks fell, with Tesla sliding 2.7%, Meta down 2.1% and Microsoft losing 1.9%.
Microsoft has scrapped leases for sizeable data center capacity in the U.S., suggesting a potential oversupply of AI infrastructure, TD Cowen analysts said in a note published late on Friday. The note picked up traction on social media platforms over the weekend, and several media outlets covered the development on Monday.
The news comes weeks after the launch of low-cost AI models from China’s DeepSeek in January rattled tech stocks and stoked doubts about overspending by U.S. companies on the popular technology.
“Everybody’s deepest fear is, even though Microsoft, Google, and Meta, have great funding, we don’t know that they’re really going to go through on their spending plans again because the tide is changing,” said Kim Forrest, chief investment officer at Bokeh Capital Partners.
“The note of caution on here is how are they going to get all this money paid back?”
Chip stocks also fell, with the broader Philadelphia SE Semiconductor Index down 1.6%.
Nvidia’s quarterly results, expected on Wednesday, puts the chip sector in the spotlight for the week.
On the other hand, Apple reversed premarket declines to gain 1.1%. The iPhone maker unveiled planned U.S. investments to help bring online a factory in Texas by 2026 to build AI servers and add about 20,000 research and development jobs across the country.
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At 10:11 a.m. ET, the Dow Jones Industrial Average rose 28.60 points, or 0.07%, to 43,456.62, the S&P 500 lost 14.54 points, or 0.24%, to 5,998.59 and the Nasdaq Composite lost 141.43 points, or 0.72%, to 19,382.58.
The more domestically-focused Russell 2000 smallcaps index lost 1%.
Eight of the 11 S&P 500 sectors slipped. Technology stocks led declines with a 0.9% drop.
U.S. stock indexes were extending losses registered in the previous week, when a batch of weak economic data and a disappointing forecast from Walmart had sparked concerns that the world’s largest economy was stalling. The benchmark S&P 500 and a smallcaps index marked their worst daily declines of 2025 on Friday.
On the data front, the Personal Consumption Expenditure index – the Federal Reserve’s preferred inflation gauge – is expected on Friday and could help markets gauge the timing of the central bank’s first rate cut this year.
Interest rate futures indicate the Fed will leave borrowing costs unchanged for the first half of the year, according to data compiled by LSEG.
Among other big movers, Berkshire’s Class B shares rose 3.5% to touch a record high after the Warren Buffett-owned conglomerate reported a record annual profit over the weekend.
Nike added 5.1% after Jefferies raised its rating on the athletic apparel maker to “buy” from “hold”.
Domino’s Pizza fell 5% after the pizza chain missed expectations for fourth-quarter same-store sales.
Markets are also on edge for any tariff comments from U.S. President Donald Trump.
Declining issues outnumbered advancers by a 1.37-to-1 ratio on the NYSE and by a 2.16-to-1 ratio on the Nasdaq.
The S&P 500 posted 22 new 52-week highs and 6 new lows while the Nasdaq Composite recorded 27 new highs and 149 new lows.
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