By Chuck Mikolajczak
NEW YORK (Reuters) -The Nasdaq closed at a record high on Monday, also rising as investors gauged the latest economic data as they looked ahead to the Federal Reserve’s final policy announcement of the year later in the week to gauge the path in interest rates.
Markets have almost fully priced in a rate cut at the end of the Fed’s two-day policy meeting on Wednesday, with a 95.4% chance of a 25 basis points (bps) cut, according to CME’s FedWatch Tool.
“Maybe the market was a little oversold last week and with a near 100% probability that the Fed will cut on Wednesday, the only outstanding question is what kind of rhetoric and comments investors will get on the guidance,” said Sam Stovall. chief investment strategist at CFRA Research in New York.
“It will probably be an aggressive cut, meaning they will cut rates, but the Fed will talk about the fact that they are still dependent on data and as a result there may be fewer cuts next year than people think. ”
On the economic front, S&P Global said the preliminary PMI for the manufacturing sector fell to 48.3 this month, down from 49.8 from economists polled by Reuters and from 49.7 in November. In addition, a measure of factory output reached its lowest level since May 2020, ahead of the prospect of higher tariffs that will raise the cost of imported raw materials next year.
Shares fell 110.58 points, or 0.25%, to 43,717.48, the S&P 500 gained 22.99 points, or 0.38%, to 6,074.08 and gained 247.17 points, or 1.24 %, to 20,173.89.
The S&P 500 posted a three-week winning streak last week and the Dow Jones also fell, while the Nasdaq posted gains for the fourth week in a row. The Dow Jones has now fallen for eight consecutive sessions, the longest daily streak of declines since June 2018.
Most mega-cap and growth stocks gained ground on Monday, with Google parent Alphabet (NASDAQ:) rising 3.6% and Tesla (NASDAQ:) rising 6.1% to lead the communications services and consumer discretionary sectors, the best performers among the eleven major S&P sectors, to help improve. sectors at the session. Wedbush Securities raised its price target on Tesla to a Wall Street high of $515.
Ahead of the Fed decision, retail sales data will be watched on Tuesday for signs of continued consumer strength.
The S&P 500 is up more than 27% this year on optimism about the growth of AI-related companies, the start of the Fed’s rate-cutting cycle, a resilient economy and the expected pro-business policies of the incoming Donald Trump administration have helped boost stock prices. . The benchmark index is up 58.2% over the past two years, which would be the strongest two-year stretch since a 65.9% rise in 1997 and 1998.
Honeywell International (NASDAQ:) climbed 3.7% after the industrial conglomerate said it was exploring a separation of its aerospace businesses.
Declining issues outnumbered advancing ones on the NYSE by a ratio of 1.27 to 1, while advancing issues outnumbered advancing ones by a 1.05 to 1 ratio on the Nasdaq.
The S&P 500 posted 14 new 52-week highs and 18 new lows, while the Nasdaq Composite posted 112 new highs and 193 new lows.
Volume on U.S. exchanges was 15.33 billion shares, compared to the full-session average of 14.04 billion over the past 20 trading days.
