US equity indexes experienced a downturn primarily influenced by setbacks in the communication services sector, as investors adopted a more cautious stance ahead of significant inflation-related reports scheduled for the week. The S&P 500 decreased by 0.4% to reach 6,066.1, while the Nasdaq Composite fell by 0.5% to 19,765.2.
The Dow Jones Industrial Average followed suit, declining 0.2% to 44,573.3 during midday on Monday. Notably, both the S&P 500 and the Nasdaq had achieved consecutive gains over the past three weeks, setting new record highs. Intraday performance showcased a retreat across most sectors, with exceptions in energy, healthcare, and materials.
Critical economic data expected this week includes crucial inflation metrics for November, specifically the consumer price index (CPI) and producer price index (PPI). The CPI report, set for release on Wednesday, is considered one of the final significant datasets prior to the Federal Reserve's policy meeting scheduled for December 17-18.
D.A. Davidson highlighted in a research note that this data could have a substantial impact on the Fed’s future monetary policy direction. As of Monday morning, market predictions indicated an 86% chance of a 25 basis-point reduction in December's interest rates in the US, an increase compared to the previous week's 62%.
Projections extending through December of the following year suggest that the Fed is likely to lower its target rate to between 3.75% and 4%, indicating a preference for limited reductions from current rates. In government bond movements, most US Treasury yields saw an uptick, with the 10-year yield rising by 3.3 basis points to 4.19%, and the two-year yield climbing 2.6 basis points to 4.12%. On the corporate front, China's State Administration for Market Regulation is conducting an investigation into Nvidia on grounds of potential anti-monopoly law violations, as reported by Bloomberg, referencing information from China Central Television.
Nvidia did not provide an immediate response to remarks from MT Newswires regarding the investigation. Following this news, Nvidia's stock plunged 3.4% during intraday trading, marking it as the weakest performer on the Dow. Furthermore, Advanced Micro Devices’ potential for increased market share is reportedly hindered by elevated competitive risks in artificial intelligence against Nvidia's prevailing leadership, alongside the rising preference for custom chips from Marvell Technology and Broadcom, as noted by BofA Securities.
Advanced Micro's shares fell by 4.4% intraday, positioning it among the poorest performers on the Nasdaq. In commodities, West Texas Intermediate crude oil futures surged 2.2%, reaching $68.65 per barrel..