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Stocks were mixed on Monday as investors considered the path of interest rates next year after the Fed hinted they would stay higher for longer.
The S&P 500 (^GSPC) fell slightly while the tech-heavy Nasdaq (^IXIC) gained as much as 0.4%. The Dow Jones Industrial Average (^DJI) dropped more than 250 points, or 0.6%.
Wall Street is coming off an upbeat Friday but a downbeat — and volatile — week, with all three major averages up above 1% Friday but down around 2% for the week. The Fed is playing the part of the Grinch, signaling that it will step back its pace of cutting next year, leading stocks to one of the worst days of the year on Wednesday.
On Friday, however, the Fed’s preferred inflation gauge, the Personal Consumption Expenditures index, showed further cooling on the inflation front — if still some stickiness. Still, the lone dissenter of the Fed’s move to cut last week said she voted against cutting rates because “there is more work to do on inflation.”
For now, according to the CME FedWatch tool, investors are betting on the Fed holding rates steady next month. For its subsequent meeting in March, bets are about 50-50 on a cut vs. a hold.
But this week’s light schedule will provide a bit of a breather and a chance for Wall Street to digest and reflect heading into 2025. Markets will close at 1 p.m. ET on Tuesday, followed by Wednesday’s Christmas holiday.
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Nvidia, Broadcom, AMD lead chip sector higher
Semiconductor stocks rose on Monday, with shares of AI chip heavyweight Nvidia (NVDA) gaining more than 1% while Broadcom (AVGO) and Taiwan Semiconductor (TSM) also edged higher.
AMD (AMD) gained more than 5% after Rosenblatt Securities named the chipmaker a top pick for 2025.
Meanwhile, Qualcomm (QCOM) shares gained after the company won a legal battle on Friday over a breach of contract dispute with Arm (ARM).
Shares of the UK-based chip designer fell more than 5% during the session.
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Consumer expectations index sees largest monthly decline since November 2020
Consumer Confidence fell short of expectations in December, largely due to how Americans are viewing the economic outlook in the year ahead.
The Expectations Index, which includes the short-term outlook for income, business, and labor market conditions, sank 12.6 points to 81.1 in December, its largest month-over-month decline since November 2020.
Overall, the Consumer Confidence index reading for December was 104.7, below the 113.2 expected by economists surveyed by Bloomberg.
“Consumer views of current labor market conditions continued to improve, consistent with recent jobs and unemployment data, but their assessment of business conditions weakened,” Conference Board chief economist Dana Peterson said in the release. “Compared to last month, consumers in December were substantially less optimistic about future business conditions and incomes. Moreover, pessimism about future employment prospects returned after cautious optimism prevailed in October and November.”
In December, 21.3% of respondents anticipated fewer jobs to be available in the next six months, up from 17.9% the month prior. Meanwhile, expectations for income decreases and worse business conditions in the next six months also moved higher.
Markets, which have recently been in a slump amid rising concerns about the uncertainty surrounding policies from the Trump administration and the Federal Reserve in 2025, moved lower after the release.
All three major indexes quickly hit their lows of the session before beginning to pare losses.
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Consumer Confidence expectations fell in December to 104.7, versus estimates for 113.2.
The reading came in below all 47 estimates, which ranged from 109.3 to 116.00 across 47 estimates, according to Bloomberg data.
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Stock mixed to kick off shortened holiday week
Stocks opened mixed to kick off a short trading week as investors assess how the Federal Reserve will handle its interest rate policy next year.
The S&P 500 (^GSPC) rose slightly, while the tech-heavy Nasdaq (^IXIC) gained 0.1%. The Dow Jones Industrial Average (^DJI) fell about 0.4%.
Consumer Discretionary stocks (XLY) gained, while Financials (XLF) and Real Estate (XLRE) lagged in early trading.
Individual movers included AI heavyweight Nvidia (NVDA) and Tesla (TSLA), up more than 1% and 2%, respectively.
Wall Street is coming off a volatile week after Fed Chair Jerome Powell hinted the central bank will scale back its pace of interest rate cuts next year.
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