NEW YORK: The S&P 500 and Nasdaq were subdued on Monday in the run-up to an action-packed week that includes the Federal Reserve’s policy meeting and inflation data, both of which will test investor optimism about interest rates easing next year.
The upbeat sentiment around stabilizing interest rates and robust quarterly earnings caused equities to rebound towards the end of the year, with the benchmark S&P 500 hitting its highest intra-day level of the year.
The S&P 500 and Nasdaq also notched their highest closing since early 2022 on Friday, after data showed nonfarm payrolls were higher than expected, underscoring hopes that the world’s largest economy could control inflation without slipping into a recession.
At 11:47 a.m. ET, the Dow Jones Industrial Average was up 90.03 points, or 0.25%, at 36,337.90, the S&P 500 was up 0.35 points, or 0.01%, at 4,604.72, and the Nasdaq Composite was down 55.09 points, or 0.38%, at 14,348.88.
Focus now shifts to the Consumer Price Index (CPI) data due on Tuesday, which is expected to show headline inflation remaining unchanged in November, and the Fed’s last interest rate decision of the year on Wednesday.
While money markets have almost fully priced in a rate-hike pause in the upcoming meeting, bets of a rate cut next year have been seeping in, with traders seeing a near 40% chance of at least a 25-basis-point cut in March 2024 and a 72.6% chance in May, according to the CME Group’s FedWatch tool.
“Anything short of a cooler CPI number or some less hawkish commentary from (Federal Reserve) Chair Powell will throw a little bit of cold water on some of the optimism,” said Michael James, managing director of equity trading at Wedbush Securities.
Elsewhere, the European Central Bank and the Bank of England, among others, are also scheduled to deliver their interest rate decisions later this week.
Megacaps including Alphabet, Apple and Amazon.com shed between 1.7% and 2%, keeping the tech-heavy Nasdaq under pressure, while a 6.6% gain in Broadcom , after Citigroup resumed coverage on the chipmaker with a “buy” rating, limited further losses.
Cigna jumped 16.2% after the health insurer ended its attempt to negotiate the acquisition of rival Humana, according to sources, and announced a $10 billion share buyback plan.
Cushioning the blue-chip Dow, Nike added 2.7% after brokerage Citigroup upgraded its stock to “buy” from “neutral”.
Among other movers, Macy’s soared 19.3% after an investor group consisting of Arkhouse Management and Brigade Capital made a $5.8 billion offer to take the department store chain private, according to a source.
Crypto stocks like Riot Platforms, Coinbase and Marathon Digital slid between 5.5% and 12% as bitcoin fell to a week’s low.
Declining issues outnumbered advancers for a 1.03-to-1 ratio on the NYSE and for a 1.49-to-1 ratio on the Nasdaq.
The S&P index recorded 50 new 52-week highs and no new lows, while the Nasdaq recorded 81 new highs and 95 new lows.
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