On Monday, the S&P 500 and the Nasdaq Composite reached unprecedented heights, reflecting market reactions to November's manufacturing sector data and comments from Federal Reserve officials. The Nasdaq, known for its technology focus, surged 1% to 19,404, while the S&P 500 climbed 0.2% to settle at 6,047.2, despite a 0.3% decline in the Dow Jones Industrial Average, which dropped to 44,782.
Among various sectors, communication services emerged as the top performer, whereas utilities faced the largest declines. Recent economic data revealed a surprising improvement in the contraction of the U.S. manufacturing sector for the previous month. This was highlighted by two separate surveys from the Institute for Supply Management and S&P Global.
The ISM manufacturing PMI exceeded expectations in November, with BMO Capital Markets noting, 'we expect the gauge to stay subdued until rates come down meaningfully.' They added that factory activity is currently one of the few soft areas in an otherwise strong economy. The upcoming release of data pertaining to the ISM and S&P Global's U.S.
services sector for the previous month is anticipated on Wednesday. Online spending during Black Friday aligned well with forecasts, amassing an impressive $10.8 billion, as reported by Adobe Analytics’ holiday shopping data. In bond markets, the yield on the U.S. two-year rose by 1.2 basis points to 4.19%, with the ten-year yield remaining steady at 4.2%. Fed Governor Christopher Waller remarked on Monday his inclination 'toward' a rate cut at the policymakers' meeting later this month, barring any unexpected economic data.
He stated, 'Policy is still restrictive enough that an additional cut at our next meeting will not dramatically change the stance of monetary policy and allow ample scope to later slow the pace of rate cuts, if needed, to maintain progress toward our inflation target.' In related comments, Atlanta Fed President Raphael Bostic noted that the journey towards achieving a 2% inflation rate seems choppy yet sustainable, especially as economic growth and the labor market cool. The likelihood of a 25-basis-point interest rate cut on December 18 surged to around 75% on Monday, up from 66% on Friday, as indicated by the CME FedWatch tool. On the corporate front, Super Micro Computer experienced a remarkable rise of nearly 29%, making it the top performer on both the S&P 500 and the Nasdaq.
The maker of artificial intelligence servers announced that a governance committee found no evidence of fraud or misconduct in its final report. The company revealed that it adopted all the committee's recommendations, including appointing a new chief financial officer. Intel encountered a leadership change with the retirement of Chief Executive Pat Gelsinger on Sunday, paralleled by the creation of a products CEO role as part of the company's leaner operating strategy.
Consequently, the shares fell by 0.5% upon closure. In contrast, shares of U.S.-listed Stellantis dropped by 6.3% after the automotive giant disclosed the resignation of CEO Carlos Tavares, which came more than a year prior to the expiration of his contract. Earnings reports for S&P 500 companies revealed an 8.2% increase in quarterly earnings compared to last year, coupled with a 5.1% rise in revenue.
Oppenheimer Asset Management noted this as indicative of a 'robust' performance as the earnings reporting cycle approaches its conclusion. In commodities, West Texas Intermediate crude oil saw a modest increase of 0.3%, reaching $68.19 per barrel. In contrast, gold prices dipped by 0.8% to $2,661 per troy ounce, while silver fell 0.5% to $30.94 per ounce..