NEW YORK — On Monday, U.S. stock markets exhibited mixed performances as investors awaited the Federal Reserve’s upcoming meeting, which is set to influence Wall Street’s trajectory into the next year.
The S&P 500 increased by 0.4%, rebounding after its first down week in four weeks. The Nasdaq composite reached a new record, climbing 1.2%, while the Dow Jones Industrial Average lagged, dropping 110 points or 0.3%.
Broadcom stands out with a notable 11.2% surge for a second consecutive day, driven by a profit report last week that exceeded analysts’ expectations. The excitement surrounding the company is particularly focused on its advancements in artificial intelligence technologies.
Wednesday will be a critical day for the market as the Federal Reserve is expected to announce its final interest rate decision of the year. Analysts largely predict a continuation of rate cuts, potentially marking the third reduction aimed at addressing a slowing job market, while inflation has nearly reached the target rate of 2%.
A key focus will be on how many additional rate cuts might occur next year. Fed officials are anticipated to provide their projections for the federal funds rate through 2025, along with other economic forecasts, following the conclusion of the meeting. Furthermore, Fed Chair Jerome Powell will address the media and answer questions thereafter.
Currently, market players maintain that the Fed might proceed with a couple more rate cuts in 2025, according to data from CME Group. However, these expectations have tempered recently due to reports indicating that reducing inflation to the target 2% level could be more challenging than anticipated. Besides last month’s marginal uptick in inflation, there’s concern that President-elect Donald Trump’s policies regarding tariffs and other measures could drive prices higher in the future.
For instance, Goldman Sachs economist David Mericle adjusted his earlier prediction and no longer expects a rate cut by the Fed in January. He mentioned that Fed officials may prefer to proceed cautiously with rate cuts due to uncertainties regarding how low interest rates must go to avoid adversely impacting economic growth.
The prevailing belief in a series of Federal Reserve rate cuts has contributed significantly to the S&P 500 achieving an all-time high 57 times this year and is on track for one of the best annual performances in two decades. Surprisingly, the economy has managed to thrive, continuing its expansion despite previous interest rate hikes, which pushed the federal funds rate to its highest level in twenty years to combat inflation that reached 9% two summers ago.
On Wall Street, MicroStrategy saw its stock rise as much as 7% during the day, thanks to a surge in bitcoin prices, which hit another record. Ultimately, the stock closed down by less than 0.1%, as bitcoin’s price retreated to below $106,000 after peaking above $107,700, according to CoinDesk.
This software company has been steadily increasing its bitcoin holdings, leading to an impressive six-fold increase in its stock price this year. In addition, the company is set to join the Nasdaq 100 index soon. Bitcoin’s value has skyrocketed from around $44,000 at the beginning of the year, fueled by optimism that Trump’s administration will foster a more cryptocurrency-friendly environment.
Honeywell’s shares climbed 3.7% after the company indicated that it is still considering a sale or a spin-off of its aerospace division as part of a broader business review. The company will provide more details during its fourth-quarter results announcement.
Conversely, Nvidia’s stock experienced a drop of 1.7%. As a leading chip manufacturer driving advancements in artificial intelligence, Nvidia was among the heaviest weights on the S&P 500 due to its substantial market cap exceeding $3 trillion.
Overall, the S&P 500 rose by 22.99 points to close at 6,074.08, the Dow Jones Industrial Average decreased by 110.58 to finish at 43,717.48, while the Nasdaq composite climbed 247.17 to end at 20,173.89.
In the bond market, Treasury yields remained relatively stable. The yield on the 10-year Treasury fell slightly to 4.39%, down from 4.40% late on Friday, while the two-year yield, which is more reflective of the Fed’s expectations, decreased to 4.24% from 4.25%.
Globally, stock markets experienced modest declines across Europe and Asia, with Hong Kong’s index falling by 0.9% and Shanghai’s dropping by 0.2% following China’s release of disappointing economic data for November, despite efforts to stimulate the economy.
In South Korea, the Kospi index declined by 0.2%, amid political turmoil as law enforcement authorities attempted to summon impeached President Yoon Suk Yeol over his controversial martial law decree. The Constitutional Court is currently deliberating whether to remove him from office or reinstate him.