Stocks start the week lower as investors weigh Fed rate developments

U.S. stocks fell on Monday as investors faced another mix of gains and weighed the outlook for interest rates after a January jobs report.

The S&P 500 (^GSPC) closed down 0.6%, while the Dow Jones Industrial Average (^DJI) fell a modest 40 points, or 0.1%. The tech-heavy Nasdaq Composite (^IXIC) fell 1%.

Dell Technologies ( DELL ) said Monday it will cut about 6,650 jobs, or about 5% of its global workforce, the latest in a wave of tech companies to announce layoffs. Shares fell 3% on Monday.

In a memo to employees, co-chief operating officer Jeff Clarke said the company was facing market conditions that "continue to erode with an uncertain future."

Elsewhere in the stock movement, shares of Bed Bath & Beyond ( BBBY ) shot up as much as 115% to climb above $6.50 on the back of the meme stock's recent rally.

In other pockets of the market, the US dollar strengthened for a third day in a row after rising 1% following Friday's jobs report.

Oil prices rose, with West Texas Intermediate (WTI) crude up 1.4% to $74.40 a barrel.

Monday's moves come after shares fell in the previous trading session but closed higher for the week. Despite Friday's declines, equity markets have been on an uptrend this year. Year to date in 2023, the S&P 500 is up 7.7% from Friday's close, the Nasdaq is up 14.7% after five straight weeks of gains, and the Dow is up 2.4%.

Whether that momentum will hold will be a big focus next week, especially after the government's monthly jobs report showed payrolls rose by 517,000 last month. For investors, it dampened the prospect that the Federal Reserve may hold off on raising interest rates this year. which is the expectation that has fueled this year's recovery.

"Job creation in January was stunning and contrary to the market story earlier in the week, the Fed not only paused, but reversed course and cut interest rates later this year," said Yung-Yu Ma, chief investment strategist at BMO Wealth Management. Note. "If this strength in the labor market doesn't turn out to be a monthly blip, the hawks at the Fed are likely to stumble and keep rates higher for longer."

Investors will get more information on the U.S. central bank's response to recent jobs data when Fed Chairman Jerome Powell speaks at the Economic Club of Washington, DC on Tuesday.

"Looking ahead, the key question for markets is whether Powell's dovish behavior was intentional or accidental," the BofA team said, adding that Powell may strike a hawkish tone during his appearance this week. "We think the Fed's embrace of disinflation is real, and it was always going to be difficult for Powell to send a hawkish message after slowing the pace of hikes for the second time in as many talks."