US benchmark equity indexes showed mostly positive movement after midday on Monday as traders prepared for the Federal Reserve's upcoming monetary policy decision and anticipated key corporate earnings due later this week. The Nasdaq Composite increased by 1.3% to reach 20,178.8 during intraday trading, while the S&P 500 climbed 0.5% to hit 6,083.1.
Conversely, the Dow Jones Industrial Average experienced a slight decline of 0.1%, settling at 43,801.1. Among the sectors, communication services and consumer discretionary stocks led the gains, while the energy sector experienced the most significant drop. Market participants widely expect that the Federal Open Market Committee will implement a quarter-percentage-point reduction to its benchmark lending rate on Wednesday, as indicated by the CME FedWatch tool.
This reduction would represent the second consecutive decrease of 25 basis points, following a more substantial 50-basis-point cut in September. Nevertheless, reports suggest a growing sentiment regarding the possibility of policymakers refraining from a rate cut next month. Factors contributing to this speculation include persistent inflation pressures in certain areas and a resilient economy, as highlighted in a Monday report from Saxo Bank.
"With the new Trump administration likely to focus on trade tariffs early on after taking office on January 20, there exists a risk of these tariffs potentially contributing to upward inflation pressures, which may prompt the Fed to adopt a more cautious stance on future cuts," the report stated. In recent economic updates, the New York Fed reported a decline in manufacturing activity, which fell more than anticipated in December, as orders and shipments dropped. Intraday yields for the US 10-year and two-year bonds increased by one basis point each to 4.41% and 4.25%, respectively. Several major companies, including Accenture, Nike, Micron Technology, Cintas, FedEx, Lennar, General Mills, and Carnival, are expected to announce their latest quarterly financial results later this week. In company-specific news, Broadcom shares soared by 10%, making it the strongest performer on both the S&P 500 and the Nasdaq.
Goldman Sachs revised its price target for Broadcom to $240 from an earlier $190. Honeywell International emerged as the top gainer on the Dow, advancing 3.7% following an announcement regarding a possible separation of its aerospace division as part of efforts to optimize its portfolio. On the downside, Super Micro Computer shares dropped 7.6%, representing the largest decline on the S&P 500 and the Nasdaq.
This follows Nasdaq's announcement that the AI server manufacturer would be removed from the Nasdaq-100 index effective prior to the market open on December 23. Ford Motor encountered one of the most significant declines on the S&P 500 during intraday trading on Monday, declining by 4.2%. Jefferies downgraded the automaker from hold to underperform and reduced its price target from $12 to $9.
Furthermore, Ford's joint venture with South Korean electric vehicle battery manufacturer SK On secured a loan from the US government, valued up to $9.63 billion, for the development of three new battery production facilities. West Texas Intermediate crude oil prices fell by 0.8% to $70.72 a barrel during intraday trading. Gold prices decreased by 0.2% to $2,671 per troy ounce, while silver rose slightly by 0.1% to reach $31.07 per ounce..