The Nasdaq closed at a record high on Monday, driven by optimism over interest rate cuts and the latest economic data. The S&P 500 also rose, with investors monitoring the Federal Reserve’s final policy meeting of the year for guidance on the path of interest rates.
The market is nearly fully priced in for a rate cut, with a 95.4% chance of a 25-basis-point reduction, according to CME’s FedWatch Tool. Sam Stovall, chief investment strategist at CFRA Research, said investors are expecting a “hawkish” cut, meaning the Fed will lower rates but stress its data dependence.
Economic data showed a decline in manufacturing activity and factory production, with S&P Global’s flash manufacturing PMI falling to 48.3 this month. However, most megacap and growth stocks gained ground on Monday, led by Alphabet (GOOGL) and Tesla (TSLA), which rose 3.6% and 6.1%, respectively.
Ahead of the Fed decision, retail sales data will be closely watched for signs of continued consumer strength. The S&P 500 has rallied over 27% this year, driven by optimism over growth in artificial intelligence-related companies and a resilient economy.
Honeywell International announced plans to explore a separation of its aerospace business, which climbed 3.7%. Volume on U.S. exchanges was 15.33 billion shares, with the Dow Jones Industrial Average falling for an eighth straight session.
Source: https://www.reuters.com/markets/us/futures-tick-higher-traders-brace-fed-data-packed-week-2024-12-16