United States benchmark averages drifted lower on Monday (Tuesday AEDT) as investors positioned themselves for the Federal Reserve’s final policy meeting of the year, with major benchmarks giving up ground after a steady run of weekly gains.
The Dow Jones Industrial Average dropped 215.7 points or 0.5% to 47,739.3, the S&P 500 declined 23.9 points or 0.4% to 6,846.5, and the Nasdaq Composite eased 32.2 points or 0.1% to 23,545.9.
The mood was weighed down by the persistent rise in Treasury yields, which continued to climb even as markets brace for what many expect to be the Fed’s third consecutive quarter-point reduction.
The 10-year Treasury rose 0.8% to 4.17%, while the 2-year yield climbed 0.5% to 3.581%.
Expectations for a December rate cut strengthened last week after data showed consumer spending rose modestly towards the end of the third quarter, reinforcing views that the central bank will push ahead with further easing to support economic momentum.
Even so, uncertainty persists around the path of monetary policy into 2025, with this week’s meeting expected to showcase one of the most divided committees in several years.
Market-based pricing shows that sentiment remains firmly tilted towards relief. The CME Group FedWatch Tool indicates that fed funds futures now assign an 89.4% probability to a December rate cut - a sharp rise from just under 67% a month earlier.
The optimism has been mirrored in broader market performance, with the S&P 500 and Nasdaq posting four consecutive gains through Friday and securing a second straight week in the green. The Dow, meanwhile, recorded its third positive session out of four.
Much of last week’s upward momentum was sparked by the delayed release of softer-than-expected September core personal consumption expenditures data, one of the last key indicators before policymakers convene.
The cooling in the Fed’s preferred inflation gauge helped calm nerves about price pressures and supported bets on continued easing.
Technology remained an area of strength during Monday’s trading. Broadcom advanced 2.8% to hit a fresh record, boosted by a report from The Information that Microsoft is in discussions with the company to design custom chips, potentially expanding its role in next-generation hardware development.
Confluent soared 29.1% after IBM confirmed plans to acquire the data streaming specialist in a US$11 billion deal expected to be completed by mid-2026.
Oracle shares were also firmer, rising 1.4% as investors looked ahead to the company’s quarterly results due Wednesday.
