The Nasdaq Composite surged to a historic peak on Monday, closing at an unprecedented level of 20,173.9, reflecting a notable increase of 1.2%. In contrast, the Dow Jones Industrial Average experienced a decline of 0.3%, settling at 43,717.5. The S&P 500 also rose, advancing 0.4% to 6,074.1. Among the sectors, consumer discretionary led the gains, while energy faced the most significant losses. This week, all eyes are on the Federal Open Market Committee, which is set to commence a two-day monetary policy meeting on Tuesday.
Expectations are high for a quarter-percentage-point reduction in the benchmark lending rate on Wednesday. This anticipated move would mark the second consecutive decrease of 25 basis points, following a previous cut of 50 basis points in September. Despite this, there is increasing discussion around the possibility of policymakers postponing a rate cut in the forthcoming month due to persistent inflation in certain sectors and the overall resilience of the economy, as highlighted in a report by Saxo Bank.
'Given the looming Trump administration's focus on trade tariffs post-inauguration on January 20, there is a risk this could create upward pressure on inflation, prompting the Fed to adopt a more cautious stance regarding further cuts,' the report indicates. In bond markets, the US two-year yield climbed by 1.2 basis points to reach 4.25%, while the 10-year yield remained relatively stable at 4.40%. Economic indicators reveal that US private-sector output experienced the most rapid growth since March 2022 in December, buoyed by a robust service sector, despite a significant contraction in manufacturing, according to S&P Global's flash purchasing managers' index ($SPGI). Additionally, the New York Fed reported a larger-than-expected decline in manufacturing activity for December, with orders and shipments plummeting. In the commodities market, West Texas Intermediate crude oil price fell by 1%, settling at $70.57 a barrel on Monday.
Several companies are set to disclose their financial results later this week, including Accenture ($ACN), Nike ($NKE), Micron Technology ($MU), Cintas ($CTAS), FedEx ($FDX), Lennar ($LEN), General Mills ($GIS), and Carnival ($CCL). Company news highlighted Broadcom ($AVGO), whose shares surged by 11%, making it the top performer on both the S&P 500 and Nasdaq.
In a significant boost for the chipmaker, Goldman Sachs raised its price target from $190 to $240. Additionally, Honeywell International ($HON) emerged as the leading gainer on the Dow, rising by 3.7%, following the announcement that it is considering a potential separation of its aerospace division as part of portfolio optimization. Conversely, Super Micro Computer ($SMCI) saw its shares plummet by 8.3%, marking the steepest decline on both the S&P 500 and Nasdaq, after the Nasdaq announced its removal from the Nasdaq-100 index, effective just before the market opens on December 23. Ford Motor ($F) faced a 3.9% drop in its stock value after Jefferies revised its rating for the automaker from hold to underperform, lowering its price target from $12 to $9.
Meanwhile, Ford's joint venture with South Korean electric vehicle battery manufacturer SK On secured a loan of up to $9.63 billion from the US government to finance the construction of three new battery production plants. In the precious metals market, gold decreased by 0.2% to $2,670.20 per troy ounce, while silver saw a slight increase of 0.1%, reaching $31.05 per ounce..