Wall Street closed mixed on Monday, driven by tech stocks. Nasdaq closed at a record high as investors tried to gauge the outlook that the Fed would offer at its December meeting. Two of the three most widely followed indexes closed the session in the green, while one closed in the red.
The Dow Jones Industrial Average (DJI) ticked down 110.58 points, or 0.3%, to close at 43,717.48. Seventeen components of the 30-stock index ended in negative territory, while 13 ended in positive.
The tech-heavy Nasdaq Composite rose 247.17 points, or 1.2%, to close at 20,173.89, a record high for the benchmark index.
The S&P 500 gained 22.99 points, or 0.4%, to close at 6,074.08. Four of the 11 broad sectors of the benchmark index closed in the green. The Consumer Discretionary Select Sector SPDR (XLY), the Technology Select Sector SPDR (XLK) and the Communication Services Select Sector SPDR (XLC) advanced 1.4%, 1% and 0.4%, respectively, while the Energy Select Sector SPDR (XLE) plunged 2.2%.
The fear-gauge CBOE Volatility Index (VIX) increased 6.4% to 14.69. A total of 15.3 billion shares were traded on Monday, higher than the last 20-session average of 14 billion. Decliners outnumbered advancers by a 1.27-to-1 ratio on the NYSE, while on the Nasdaq Composite, advancers outnumbered decliners by 1.05-to-1.
Investors at this juncture firmly believe that the Fed will cut rates by a further 25 basis points (bps) at the conclusion of its December meeting on Wednesday. The central bank has to gradually bring down inflation to its target rate while achieving a soft landing of the economy.
The Fed reduced the market interest rate by 75 bps in September and to a range of 4.5-4.75% in November. A further 25 bp cut would bring the rate down to 4.25-4.50%. Per CME’s FedWatch tool, market participants currently sense a 95.4% probability that the central bank would bring rates down by 25 bps in December. However, they also indicate chances of a pause in January and expect the Fed to be hawkish in setting expectations.
Technology stocks continued their upward momentum on Monday, as they did throughout last week and the better part of last month. Consequently, shares of CrowdStrike Holdings, Inc. CRWD and Zscaler, Inc. ZS rose 5.5% and 3%, respectively. Zscaler currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
On Monday, oil prices fell on weakness in consumer spending in China, the world's largest oil importer. Brent crude settled at $73.91/barrel, down 58 cents, or 0.8% lower. WTI crude settled at $70.71/barrel, down 58 cents, also 0.8% lower.
Business activity remained steady in New York in December, per firms responding to the Empire State Manufacturing Survey. After rising sharply to 31.2 in November, the headline general business conditions index retreated to 0.2 against a consensus of 10.
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