Feb 2 (Reuters) - The S&P 500 and the Nasdaq seesawed between gains and losses on Monday, as markets absorbed a sharp selloff in precious metals at the start of a week packed with corporate earnings and key economic data.
Gold dropped as much as 6% and silver tumbled 10% before recovering some losses, as commodity exchange CME Group boosted margin requirements for precious metals following a historic plunge on Friday. U.S.-listed gold and silver miners pared declines to trade higher.
"There's a ripple effect in stocks, but you're seeing sort of a change in mindset in terms of where equity investors are looking for leadership," said Jim Baird, chief investment officer at Plante Moran Financial Advisors.
The metals selloff deepened last week after U.S. President Donald Trump nominated Kevin Warsh as the next Federal Reserve chair to replace Jerome Powell in May, a move that investors largely viewed as hawkish.
At 09:46 a.m. ET, the Dow Jones Industrial Average (.DJI), rose 0.48% to 49,129.46. The S&P 500 (.SPX), gained 0.14% to 6,948.69, while the Nasdaq Composite (.IXIC), lost 0.07% to 23,447.57.
The volatility VIX index (.VIX), advanced to 17.45, hovering near a two-week high after last week's choppy stretch, triggered by mixed mega-cap earnings and heightened policy uncertainty stemming from Warsh's nomination.
Shares of energy companies fell, tracking a decline in oil prices after Trump said Iran was "seriously talking" with Washington, signaling de-escalation and easing supply disruption concerns.
Exxon Mobil (XOM.N), and Chevron (CVX.N), fell 1.6% each. The S&P Energy (.SPNY), index dropped the most, down 1.8%.
Rare earth miners and critical minerals gained after Bloomberg News reported the Trump administration has launched a $12 billion minerals stockpile to counter China.
Tech mega-caps slipped, with Nvidia (NVDA.O), and Tesla (TSLA.O), down more than 2% each. Meta (META.O), lost 1.1%.
Microsoft shares, however, recovered from their worst week since March 2020 on Friday after cloud revenue disappointed, highlighting growing investor sensitivity to lofty capital-spending plans and the pressure on Big Tech to justify record outlays with meaningful returns.
"You're seeing investors being more selective... and you're seeing companies starting to warn a bit on earnings, or where investors are perhaps reassessing their expectations for growth," Baird said.
Disney (DIS.N), fell 6% despite posting first-quarter earnings above Wall Street expectations.
Markets are heading into another crowded week of tech earnings, with 128 of S&P 500 companies on deck to report, including Alphabet, Amazon and AMD (AMD.O), opens new tab.
Attention will also be on JOLTS, ADP hiring and nonfarm payrolls, along with PMI figures, due this week.
Meanwhile, the U.S. entered what is expected to be a brief shutdown on Saturday after Congress failed to approve a deal to keep a wide swath of operations funded.
The House of Representatives took up legislation to lift a partial shutdown, with a final vote expected on Tuesday.
For January, while geopolitical flare-ups triggered bouts of selloff, all three indexes posted gains, with the S&P crossing 7,000 points for the first time. The index also hit record levels earlier in the month, supported by resilient earnings and ongoing appetite for AI-driven growth.
Reporting by Pranav Kashyap and Twesha Dikshit in Bengaluru; Editing by Shinjini Ganguli and Shilpi Majumdar
