Wall Street Indices Rise Amid Global Interest Rate Decisions: U.S. stock indices closed broadly higher
on Monday as traders prepared for interest rate decisions from major central banks worldwide later this week.
The S&P 500 rose by 0.4%, while the Nasdaq 100 climbed 1.5% to reach another record high.
Broadcom and Tesla were among the session’s biggest gainers.
The 10-year Treasury yield remained unchanged at 4.40%, while Bitcoin prices reached a new record high.
Content Overview
United States
Sentiment in the U.S. was relatively positive,
with a widely anticipated quarter-point interest rate cut by the
Federal Reserve is viewed as providing additional support and extending stock outperformance.
This optimism contrasts with losses in Asia and Europe on Monday
following weaker-than-expected retail data from China.
In the U.S., Chris Larkin, managing director of trading and investing at E*TRADE from Morgan Stanley,
stated that short-term momentum “may depend on what Federal Reserve Chair Jerome Powell
says and whether retail sales or the Personal Consumption Expenditures Index surprise the market.”
He added that most of December’s stock market gains historically occur in the second half of the month,
noting that the S&P 500 has delivered a positive net return 78% of the time since 1957.
Focus on the Fed Decision
Traders are currently analyzing new economic data. On Monday,
reports showed that U.S. services sector activity has expanded fastest since October 2021.
Meanwhile, a measure of factory activity in New York State fell by the most since May.
However, the main focus remains on the Federal Reserve’s decision on Wednesday,
which will be followed by monetary policy announcements from Japan,
the Nordic countries, and the United Kingdom later this week.
Tony DeSpirito, BlackRock’s Chief Investment Officer for fundamental equities,
said on Bloomberg Television: “Even if we get a significant rate cut,
it will be because the Fed sees underlying strength in the economy.
This suggests that the rise in U.S. stocks may continue to broaden.”
Meanwhile, Monday’s Bloomberg Dollar Index fluctuated between modest gains and losses.
After rising by more than 6% this year, Wall Street has begun to feel the strain of the dollar,
as Donald Trump’s policies and rate cuts are seen as factors
putting pressure on the currency toward the latter part of 2025.
Tensions in Canada and Europe
The Canadian dollar dipped slightly following reports that Prime Minister Justin Trudeau plans to appoint Dominic LeBlanc
as Canada’s finance minister.
LeBlanc will replace Chrystia Freeland, who resigned due to disagreements over how to prepare for a Trump administration.
Elsewhere, German lawmakers approved a measure paving the way for elections within two months,
supporting Chancellor Olaf Scholz’s plan to end his struggling administration early.
Meanwhile, private sector activity in the Eurozone contracted less than expected,
with a larger-than-anticipated contribution from the services sector.
French bonds underperformed their peers after Moody’s downgraded the country’s credit rating.
Additionally, the Bank of France lowered its domestic growth forecasts,
citing political instability as a drag on household and business confidence.
Further Decline in China
In China, retail sales growth unexpectedly slowed in November despite signs of improvement in the housing market.
The data added to traders’ disappointment last week when Beijing pledged
to boost consumption but failed to provide details regarding fiscal stimulus.
Charu Chanana, Chief Investment Strategist at Saxo Markets in Singapore,
stated that retail sales data “reflects the dire situation there,
where stimulus efforts have prioritized optics over meaningful economic improvements.”
He added: “Even for a tactical recovery,
more is needed after a series of false starts and the looming threat of tariffs.”
Meanwhile, oil prices fell after the latest Chinese economic data intensified
concerns about weakening demand in the world’s largest crude importer.
Wall Street Indices Rise Amid Global Interest Rate Decisions