S&P 500 hovers near a record with Fed meeting looming, tech shares gain

The S&P 500 held steady near a record on Monday as investors digested the benchmark’s record level heading into a week with a key Federal Reserve meeting.

The broad equity benchmark traded near the flatline after closing at a record high in the previous session. The Dow Jones Industrial Average slipped 110 points. The Nasdaq Composite gained 0.2% as Apple, Netflix and Amazon all rose about 1%.

Investors are giving growth and tech stocks another chance as bond yields come down. The 10-year Treasury went below 1.43% on Friday, a three-month low. Cathie Wood’s Ark Innovation, an ETF that focuses on disruptive technology, returned about 6% last week.

Boosting cryptocurrency sentiment, Tesla CEO Elon Musk on Sunday said the company will resume bitcoin transactions once it confirms there is reasonable clean energy usage by miners. Bitcoin recovered back above $40,000 on the news.

Tesla, also a big holder of bitcoin, climbed more than 2%.

The Fed’s two-day policy meeting will likely dominate investor behavior this week. Although the central bank is not expected to take any action, its forecasts for interest rates, inflation and the economy could move the markets. The Fed could possibly move up its forecast for a rate hike after saying in its last quarterly update that it would keep its benchmark rate near zero through 2023, the Wall Street Journal reported on Monday.

Fed Chairman Jerome Powell speaks to the press after the central bank issues its statement Wednesday and traders will be parsing his comments for any clues as to when the Fed could start to end its aggressive monthly asset purchases, especially given recent hotter-than-expected inflation readings.

“Considering the recent outsized inflation reports, the Federal Reserve’s meeting this week will be scrutinized for any telltale sign the Fed’s timetable for either raising the Funds Rate or tapering QE is being moved forward,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC.

“Any evidence suggesting monetary tightening is being moved forward will likely bring volatility to the stock market,” added Paulsen.

U.S. stocks ended last week with a record closing high for the S&P 500 and the beginning of a rotation back into growth names.

Last week, the 30-stock Dow Jones Industrial Average fell 0.8%, but the S&P 500 rose 0.4%, for its third straight positive week. The Nasdaq Composite was the outperformer with a gain of nearly 1.9%, posting its fourth winning week in a row as the tech trade came back into favor.

“Because the S&P 500 Index reached yet another new record high last week, investors will be watching to see if this signals even higher levels near term,” said Paulsen.

Meme stocks also garnered attention last week with AMC Entertainment, Clover Health Investments, GameStop experiencing volatile trading as investors on social media platforms continued to pile in.

— with reporting from CNBC’s Patti Domm.