Markets Take a Breather Amid Interest Rate Uncertainty
As investors digest the Federal Reserve’s hints about keeping interest rates higher for longer, the stock market is experiencing a mixed reaction. The S&P 500 slipped nearly 0.3%, while the Nasdaq hovered around the flatline. The Dow Jones Industrial Average dropped over 250 points, or 0.6%.
A Volatile Week Comes to a Close
Wall Street is still reeling from the Fed’s signals last week, which led to one of the worst days of the year on Wednesday. However, the Fed’s preferred inflation gauge, the Personal Consumption Expenditures index, showed signs of cooling on the inflation front on Friday. Despite this, investors are betting on the Fed holding rates steady next month, with a 50-50 chance of a cut or hold in March.
A Light Schedule Ahead
This week’s market activity will be subdued, with markets closing at 1 p.m. ET on Tuesday and a Christmas holiday on Wednesday. This breather will give investors a chance to reflect on the year ahead and reassess their strategies.
Consumer Confidence Takes a Hit
The Consumer Confidence index fell short of expectations in December, largely due to Americans’ gloomy outlook on the economy in 2025. The Expectations Index plummeted 12.6 points to 81.1, its largest month-over-month decline since November 2020. Consumers are increasingly pessimistic about future business conditions, incomes, and employment prospects.
Market Reaction
The release of the Consumer Confidence data sent markets lower, with all three major indexes quickly hitting their lows of the session. However, they began to pare losses soon after.
Stocks Open Mixed
In early trading, the S&P 500 rose slightly, while the Nasdaq gained 0.1%. The Dow Jones Industrial Average fell about 0.4%. Consumer Discretionary stocks led the way, while Financials and Real Estate lagged. Individual movers included Nvidia and Tesla, up over 1% and 2%, respectively.
Economic Data and Earnings
The Conference Board released its Consumer Confidence data for December, which fell short of expectations. There are no notable earnings releases scheduled for today.
Catch Up on the Weekend’s Top Stories
- Wall Street reevaluates ‘higher for longer’ rates: The week ahead
- Bitcoin posts first weekly decline since Trump’s election win
- Honda stock rises as Nissan merger talks formalize
- Elon Musk makes ‘overstaffed’ Fed target in quest for efficiency
- Biden launches new US trade probe into legacy Chinese chips
- The Container Store files for Chapter 11 bankruptcy
- Novo rises as 2025 obesity drug market set to captivate investors
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