US stocks traded in a mixed fashion Monday, with investors focused on future interest-rate cuts at the start of a holiday-shortened week.
At 09:35 ET (14:35 GMT), the Dow Jones Industrial Average fell 120 points, or 0.3%, while the S&P 500 index climbed 7 points, or 0.1%, and the NASDAQ Composite gained 95 points, or 0.5%.
The New York Stock Exchange is set to close early Tuesday for Christmas Eve, and the market is shut on Christmas Day.
Wall Street volatility
The Wall Street indexes have seen volatile trading of late, with the blue-chip Dow Jones Industrial Average suffering a 10-day losing streak, its longest since 1974, slumping over 1,000 points last Wednesday after the Federal Reserve signaled fewer rate cuts for 2025 than previously projected.
Friday's cooler-than-expected inflation reading helped stocks recoup some of the losses, and trading is likely to be more rangebound during the festive period.
Month-to-date, the DJIA is down 4.6% in December, while the S&P 500 is off 1.7%. The tech-heavy Nasdaq Composite bucked the downtrend, rising 1.8% this month.
Investors should “purchase a neck brace” in January, Yardeni Research said, predicting more market volatility as Donald Trump prepares to retake office. This volatility, driven by potential policy changes under Trump 2.0, could present more buying opportunities.
Fed interest rate moves key
PCE price index data—a key inflation gauge favored by the Federal Reserve—rose 0.1% in November, a slower pace from October's 0.2% increase. This brought the annual PCE inflation rate to 2.4%, slightly below estimates of 2.5%.
Although the recent data indicated some cooling in inflation, it still remained above the Fed's 2% annual target, indicating that overall inflation still remained sticky.
The Fed signaled a cautious approach to monetary policy adjustments, emphasizing the need for continued progress on inflation before considering further rate cuts.
Comments from Fed officials on Friday showed that some policymakers were starting to factor in fiscal policy uncertainty, such as tariffs, in their outlooks.
Fed officials reiterated that they were still uncertain about how the new Donald Trump administration policies would affect the interest rate outlook, with some saying it was the very same uncertainty that led them to forecast fewer cuts in 2025.
The Fed cut rates by 25 basis points on Wednesday but forecast just two rate cuts in 2025, compared with a prior forecast of four cuts.
Rumble surges
In corporate news, Qualcomm (NASDAQ:QCOM) stock rose over 2% after a jury found its central processors are properly licensed under an agreement with UK-based Arm Holdings (NASDAQ:ARM), which fell over 3%.
Rumble (NASDAQ:RUM) stock jumped 50% after the video-sharing platform said it has received a strategic investment of $775 million from cryptocurrency firm Tether.
Eli Lilly (NYSE:LLY) stock gained 1.5% after the U.S. Food and Drug Administration approved the drugmaker's weight-loss treatment, Zepbound, for obstructive sleep apnea on Friday.
Crude stable after last week's losses
Crude prices slipped slightly Monday, as traders digested cooler than expected inflation data with a US shutdown averted.
By 05:50 ET, the US crude futures (WTI) dropped 0.1% to $69.36 a barrel, while the Brent contract fell 0.3% to $72.36 a barrel.
President Joe Biden approved over the weekend a stop-gap spending bill approving government funding until March, ending concerns that a shutdown, especially during the holiday season, would disrupt travel and hurt fuel demand.
Oil markets were also supported by a cooling in price pressures, which opened the possibility of more Fed interest rate cuts next year, potentially boosting economic activity.
Both oil benchmarks fell more than 2% last week on concerns about global economic growth and oil demand.
(Ayushman Ojha contributed to his article.)
