U.S. benchmark equity indexes experienced a mixed day on Monday as investors looked forward to the Federal Reserve's latest decision on monetary policy and the release of significant corporate earnings later this week. Markets are largely expecting a quarter-percentage-point reduction in the benchmark lending rate by the Federal Open Market Committee on Wednesday, according to the CME FedWatch tool.
This would represent a second consecutive decrease of 25 basis points, following a larger cut of 50 basis points in September. Saxo Bank highlighted in a report that there is increasing speculation about the possibility of policymakers opting to refrain from further rate cuts in the upcoming month.
Key factors contributing to this chatter include persistent inflation in some categories and an overall resilience in the economy. "With the new Trump administration likely to focus on trade tariffs early on after taking office on January 20, there is a risk that this could introduce upward pressures on inflation, potentially leading the Fed to adopt a more cautious approach regarding future cuts," the report noted. In commodities, January West Texas Intermediate crude oil saw a decline of $0.58, closing at $70.71 per barrel.
Meanwhile, February Brent crude, the global benchmark, fell by $0.61 to settle at $73.88 as disappointing economic data from China raised concerns about the outlook for the country, which remains the world's largest oil importer. In stock movements, Honeywell International ($HON) experienced a rise of 3.9% after announcing that it is assessing the potential separation of its aerospace segment as part of a strategy to enhance its portfolio.
On the other hand, shares of Super Micro Computer ($SMCI) dipped 8.6%. This decline followed Nasdaq’s announcement on Friday that this artificial intelligence server maker will be excluded from the Nasdaq 100 index, with an effective date prior to the market opening on December 23..