Investing.com-- The Dow closed at record highs Monday, as cyclical stocks including financials were back in favor amid a rotation out from tech ahead of a widely expected Federal Reserve cut next month.

At 16:00 ET (21:00 GMT), the Dow Jones Industrial Average rose 0.16%, or 65 points, to a record of 41,240.52. The NASDAQ Composite closed 0.8% lower, the S&P 500 was down 0.3%.

Tech stumbles amid rotation out of growth stocks; Apple unveils product launch date; Nvidia (NASDAQ:NVDA) earnings due this week

Tech started the week on the backfoot as investors rotated out of growth sectors of the market, with Nvidia down 1% ahead of its quarterly results due this week.

Apple (NASDAQ:AAPL) was slightly higher as anticipation grows about the iPhone maker's upcoming product launch event due Sept. 9, when many expect it to unveil new iPhones and Apple Watch models.

Adding to the fall in chip stocks, meanwhile, Micron Technology Inc (NASDAQ:MU) fell more than 3% after Needham cut its price target on the stock to $140 from $150, citing concerns over demand.

In China tech news, PDD Holdings Inc DRC (NASDAQ:PDD) fell 28% after reporting second-quarter revenue that fell short of analyst estimates.

The fall in tech comes as cyclical sectors including financials, which hit 52-week highs on Monday, rallied on expectations that these cohort of stocks are likely to significantly benefit from rate cuts.

Elsewhere, Boeing Co (NYSE:BA) fell nearly 1% after Nasa said two astronauts stuck in orbit at the Internal Space Station will return next February on SpaceX-crewed flight following trouble with Boeing's new capsule.

PCE inflation on tap as Sept rate cut bets build

This week the data-dependent Fed will have a raft of economic indicators to consider ahead of its September rate decision, including the Commerce Department's revised second-quarter GDP and its broad-ranging Personal Consumption Expenditures (PCE) report, which includes the Fed's preferred inflation yardstick, the PCE price index.

"The disinflation process continues, and we now estimate core PCE inflation at a 1.9% 3-month annualized pace through July, down from 3.9% in May," Morgan Stanley said in a Monday note.

The inflation data will be closely watched though recent remarks by Fed policymakers have indicated that the Fed’s focus has shifted toward labor market risks and that inflation is close enough to target to facilitate cutting rates starting next month.

Fed Chair Jerome Powell said Friday that "the time has come" to lower the Fed funds target rate, and "the upside risks of inflation have diminished." The remarks appeared to all but guarantee a rate cut at the Fed's Sept. 18 meeting, which would be the first such cut in over four years.

(Noreen Burke, Ambar Warrick contributed reporting)

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