Dow hits record high; tech stocks pressure S&P, Nasdaq.

The Dow Jones Industrial Average hit a new record high on Monday, before retreating from those levels, as investors tried to put the sharp sell-off that occurred earlier this month behind them.

The Dow Jones Index rose by 50 points, or 0.16%, after rising earlier by more than 200 points, or 0.6%. The Standard & Poor's 500 Index fell 0.31%, while the Nasdaq Composite Index fell 0.85%.

Traders also seemed to be moving away from technology and into other areas of the market. The S&P 500 energy sector rose more than 1%, while technology fell 1.5%. Nvidia fell 2% ahead of its earnings report scheduled for Wednesday afternoon, an event that traders insist is the key to the market and AI enthusiasm that has propelled this bull market. Other chip stocks such as Broadcom and Micron also fell.

Ross Mayfield, an analyst at Baird, told CNBC: 'I think there is a little concern in the technology sector about Nvidia's upcoming earnings. The market is in a fairly healthy place, but it's really hard to make much progress if technology is lagging behind - it has too much weight in the index - and right now, it's behaving like a laggard.'

The market launched into August under pressure, as concerns about a potential recession and the unwinding of a popular hedge fund trade linked to the Japanese yen pulled stocks from their record levels. The S&P lost 3% on Aug. 5 — its biggest single-day loss since 2022. The Dow also saw its worst selloff in nearly two years that day, falling more than 1,000 points.

However, since then, expectations of lower Fed interest rates and improving US economic data have sent stocks higher. The S&P 500 has risen 8% since August 5 and is less than 1% away from its record highs set in mid-July, while the Dow Jones is up about 7%. The recovery extended to the broader market, with the Russell 2000 small-cap index adding 3% after Powell's comments.

Stocks come after a strong week highlighted by Federal Reserve Chairman Jerome Powell's comments that laid the groundwork for lower interest rates. Wall Street has been anxiously awaiting a cut in interest rates, especially in light of some troubling economic data that sparked a sell-off at the beginning of August and raised investors' concerns that higher borrowing costs could hurt the US economy.

Powell did not indicate when or how much interest rates might be cut.. However, traders remain unanimous in their expectations for a rate cut at the Fed's September policy meeting, according to CME Group's FedWatch tool.

“We think they will cut rates by 25 basis points in September, November and December because they want the market to know they are not behind the curve,” said Sam Stovall, chief investment strategist at CFRA Research. "But at the same time, they want to make sure that they don't go into reduction mode too quickly."