U.S. stocks opened on mixed footing Monday as investors balanced optimism about upcoming Federal Reserve rate cuts with concerns over persistent inflation and weakening consumer confidence.

At 9:31 a.m. ET, the Dow Jones Industrial Average slipped 52.27 points, or 0.12%, to 45,348.6. The S&P 500 rose 11.69 points, or 0.18%, to 6,493.19, while the Nasdaq Composite gained 110.80 points, or 0.51%, to 21,811.2. The Russell 2000, a gauge of small-cap stocks, edged up 0.55 points, or 0.23%, to 238.32.

 Fed Easing Narrative Gains Ground

Investors continue to weigh monetary policy as the key driver of market direction into year-end. Analysts at Wedbush Securities noted that “weak job growth and political pressure should drive at least two rate cuts before year end despite persistently elevated inflation even beyond tariff pressure”

Recent labor market data have underscored the dilemma: payrolls growth has slowed to a fraction of its pace from earlier in the cycle, while inflationary pressures remain sticky, compounded by higher costs tied to tariffs.

Market Dynamics and Sector Shifts

Wedbush highlighted that while volatility may increase around a looming government shutdown and September’s seasonally weaker backdrop, overall market conditions remain constructive. The firm pointed to “the recent rotation from growth to value, neutral sentiment, non-extended positioning, improving breadth and rising liquidity” as supportive for the bull market outlook into year-end Technology leadership is also in flux. Demand tied to artificial intelligence remains strong, particularly in infrastructure, but software stocks are diverging. Wedbush analysts emphasized that the “AI fallout creates a stock picker’s market especially in software,” naming Palantir and MongoDB as top picks.

AI Adoption Slows Among Large Firms

Fresh data compiled by Apollo Global Management from the U.S. Census Bureau’s biweekly business survey shows a divergence in AI adoption trends. While smaller firms continue to add tools such as machine learning and natural language processing at a steady clip, adoption rates have begun to decline for companies with more than 250 employees. The slowdown suggests that large corporations may be hitting early saturation or encountering integration challenges