Stocks caught in tug of war between tech and rest

A gauge of the Magnificent Seven megacaps sank 2%, led by a selloff in Tesla Inc.

A rebound in US stocks lost steam, with a rout in tech megacaps weighing on a market that earlier got relief from retail sales figures that were not as bad as feared.

While 85% of the S&P 500’s shares gained, a slide in its biggest companies curbed a bigger advance. A gauge of the Magnificent Seven megacaps sank 2%, led by a selloff in Tesla Inc. Giant chipmaker Nvidia Corp. slipped on the eve of a keynote speech by chief Jensen Huang. Just days ahead of the Federal Reserve decision, economic data did little to alter bets on the path of monetary policy: money markets don’t see rate cuts before June or July.

US retail sales rose by less than forecast in February and the prior month was revised lower. However, the so-called control-group sales — which feed into the government’s calculation of goods spending for gross domestic product — increased 1% last month, reversing the previous drop.

A sense of wait-and-see may emerge from policymakers this week, in their first assessment of how Donald Trump’s trade policies are impacting the economy. With Federal Reserve officials expected to hold rates steady on Wednesday, the market will focus on officials’ updated economic projections and Chair Jerome Powell’s press conference for clues on the path ahead.

“While financial markets appear to be stabilizing, investors are wrestling with the decision of whether to buy the dips or sell the rallies in an environment of exceptionally high policy uncertainty,” said Jason Draho at UBS Global Wealth Management.

Treasury Secretary Scott Bessent, a former hedge fund manager, said he’s not worried about the recent downturn in equities as the US seeks to reshape its economic policies.

“I’ve been in the investment business for 35 years, and I can tell you that corrections are healthy, they are normal,” Bessent said Sunday on NBC’s Meet The Press. “I‘m not worried about the markets. Over the long term, if we put good tax policy in place, deregulation and energy security, the markets will do great.”

To Bret Kenwell at eToro, despite the mixed update on retail sales, the data could give investors some cautious optimism that perhaps we might see a more resilient consumer in the coming months.

“If the consumer can hold up, there’s a good chance the economy can too,” he said.

A sign of stability is emerging after the S&P 500 plunged into one of its sharpest-ever corrections: Traders are ditching bets that another deep slide is ahead.

Even before the benchmark for US equities rebounded strongly on Friday, the group was largely offloading its S&P 500 hedges. The cost of options protecting against a 10% decline in the SPDR S&P 500 ETF Trust in the next three months plunged to near the lowest level since 2023 relative to contracts that profit from a 10% rally, data compiled by Bloomberg show.