US equity indexes exhibited varied performance midday Monday as the Dow Jones Industrial Average trailed the S&P 500 and the Nasdaq Composite, bolstered by advancements in the technology and consumer discretionary sectors. The S&P 500 rose 0.5% to 6,082.2, while the Nasdaq appreciated by 1.2% to 20,173.4, achieving a new intraday record high of 20,174.3.
Conversely, the Dow dipped 0.1% to 43,798.1. Major gainers included Broadcom ($AVGO), Tesla ($TSLA), and Alphabet ($GOOGL). Energy stocks experienced the steepest intraday declines. Despite the S&P 500 Index's price/earnings ratio sitting high by historical metrics, its valuation remains justifiable due to the index's evolution and anticipated earnings growth.
A note from Wells Fargo Investment Institute asserts, "Stocks are not in a bubble, and investors should not let an above average P/E ratio keep them from participating in the continuation of the bull market we see in 2025," emphasizing that a pullback of 5% to 10% should be perceived as an opportunity for buying.
As the valuation discourse continues, investor attention will pivot to policy updates from the Federal Reserve slated for Wednesday. Last week's consumer price index and similar data hint that the Personal Consumption Expenditures Price Index for November may increase by 0.1% month-over-month, which underscores the prevailing disinflation trend.
Morgan Stanley commented, "We have to see just how cautious [Fed] Chair [Jerome] Powell sounds this week and in January, and our baseline of cuts in March and May will be challenged if future data releases show a reversal, whether from residual seasonality or a pass-through from newly imposed tariffs." Concurrently, most US Treasury yields displayed an upward trend intraday, with the 10-year yield ticking up to 4.40%, close to its peak in approximately three weeks.
"Paring back on cuts for 2025 will help ease concerns from more hawkish Fed members but could create some bond market volatility if the Fed's year-end 2025 median projection widens from futures market expectations," the Wells Fargo note added. In economic updates, the December flash reading of manufacturing conditions from S&P Global dropped to a three-month low of 48.3 from 49.7 in November, falling short of the 49.5 anticipated in a Bloomberg survey.
In corporate news, US Vice President Kamala Harris announced that Micron Technology ($MU) secured a $6.1 billion investment under the CHIPS and Science Act designated for the construction of memory chip facilities in Clay, New York, and Boise, Idaho. This announcement propelled Micron shares up by 7.2% intraday, positioning them as top performers on both the S&P 500 and Nasdaq.
West Texas Intermediate crude oil futures saw a decline of 0.5% to $70.96 a barrel, while gold slipped 0.2% to $2,669.8 an ounce, with silver inching up 0.1% to $31.07 per ounce..