1 week ago

S&P 500, Nasdaq rise on optimism ahead of rate cut, economic data

December 16, 2024 – 7:15 AM PST

The Federal Reserve building stands in Washington April 3, 2012. REUTERS/Joshua Roberts/File Photo

(Reuters) – The S&P 500 and the Nasdaq climbed while the Dow was flat on Monday, as investors looked ahead to an anticipated Federal Reserve interest rate cut later in the week, as well as several key data releases that will help set the tone for policy next year.

The Fed’s final rate decision of the year is due on Wednesday, with traders pricing in an over 97% chance of a 25 basis point rate reduction, as per CME’s FedWatch.

However, the primary focus will be on policymakers’ outlook for next year, with an updated “dot plot” of forecasts also to be released, as bets moderate on the pace of rate cuts amid strong economic growth and persistent inflation.

“The market’s hungry for more cuts and the Fed’s left with a task of juggling – is this doable without creating inflationary pressure?” said Andre Bakhos, managing member at Ingenium Analytics.

“The odds favor the enthusiasm,” Bakhos said.

A scatter chart titled “Where policymakers expect to steer interest rates.” Projections by members of the Federal Open Market Committee

S&P Global’s December flash PMI showed manufacturing activity stood at 48.3, compared with estimates of 49.8 according to economists polled by Reuters, while services activity stood at 58.5, above estimates of 55.7.

On the data docket are industrial production figures, retail sales, and personal consumption expenditure data scheduled throughout the week.

At 9:46 a.m. ET, the Dow Jones Industrial Average (.DJI) fell 8.81 points, or 0.02%, to 43,819.25, the S&P 500 (.SPX) gained 13.34 points, or 0.22%, to 6,064.47 and the Nasdaq Composite (.IXIC) gained 82.02 points, or 0.41%, to 20,009.17.

Most megacap and growth stocks traded higher, with Google-parent Alphabet (GOOGL.O) up 2.1% and Amazon.com (AMZN.O) rising 1%, boosting communication services (.SPLRCL) and consumer discretionary (.SPLRCD) sectors 1% and 0.7% respectively.

Yields on Treasuries inched lower across the board, with the ones on the benchmark 10-year bond easing from an over three-week high hit on Friday. It was last at 4.3770%.

Crypotocurrency stocks rose as bitcoin briefly jumped above $106,000 after President-elect Donald Trump suggested he plans to create a U.S. bitcoin strategic reserve similar to its strategic oil reserve.

Coinbase Global (COIN.O) rose 3.7% and bitcoin miner MARA Holdings (MARA.O) gained 4.9%.

The benchmark S&P 500 and the blue-chip Dow ended the previous week lower, while the tech-heavy Nasdaq clocked its fourth straight week of gains after breaching the 20,000 mark for the first time.

Still, stocks have had a bumper run in 2024 as gains in artificial intelligence-related companies, the start of the Fed’s rate cutting cycle and expected pro-business policies from Trump’s incoming administration have lifted equities.

Shares of MicroStrategy (MSTR.O) rose 2.6% as the software company and bitcoin buyer was set to join the Nasdaq 100 index (.NDX). Super Micro Computer (SMCI.O), among those set to be removed from the index, dropped 7.1%. The changes will take effect on Dec. 23.

Honeywell International (HON.O) gained 1.8% after the industrial conglomerate said it was exploring a separation of its aerospace business.

Declining issues outnumbered advancers by a 1.04-to-1 ratio on the NYSE and by a 1.03-to-1 ratio on the Nasdaq.

The S&P 500 posted nine new 52-week highs and 12 new lows, while the Nasdaq Composite recorded 50 new highs and 88 new lows.

^{Reporting by Lisa Mattackal and Purvi Agarwal in Bengaluru; Editing by Maju Samuel}

Advertisements below

Read Entire Article