Wall Street Prepares for Economic Data and Fed Chair Speech
Wall Street’s main indexes were set to open lower on Monday as investors moved to the sidelines, bracing for fresh economic data and a closely watched speech from Federal Reserve Chair Jerome Powell to gauge the central bank’s policy decision later this month.
Market Performance in November
The S&P 500 and the blue-chip Dow posted modest gains last month, as expectations of a December interest rate cut outweighed concerns about a potential bubble in artificial-intelligence-related stocks. However, the tech-heavy Nasdaq’s losses in November, its biggest decline since March, served as a reminder that worries around AI spending persist.
Economic Data and Fed Chair Speech
Surveys by S&P Global and the Institute for Supply Management on November manufacturing activity in the U.S. – due just after markets open – could offer an insight into the country’s economic health. Recent data still shows that prices are likely to keep rising, which does not fully match what investors expect. Because of this mismatch, markets may stay bumpy until clearer numbers come in, said Daniela Hathorn, senior market analyst at Capital.com.
Fed Chair Powell is scheduled to speak later in the day. Traders will scrutinize his remarks for clarity about his position on any upcoming interest rate cuts. Despite most policymakers sounding a cautious tone, dovish signals from a handful of key voting members and reports that White House economic adviser Kevin Hassett is a frontrunner to succeed Powell have raised expectations for more monetary policy easing in the months to come.
Interest Rate Expectations
Traders are pricing in an 87.6% chance for a 25-basis-point interest rate cut in December, roughly doubling the odds from late last month, according to CME Group’s FedWatch Tool. Investors are also keenly awaiting a delayed September report on the Personal Consumption Expenditures Index, the Fed’s preferred inflation gauge, due on Friday.
Market Reaction
At 08:35 a.m. ET, Dow E-minis were down 204 points, or 0.43%, S&P 500 E-minis were down 44.75 points, or 0.65% and Nasdaq 100 E-minis were down 237 points, or 0.93%. Expectations that the Bank of Japan could hike interest rates in December to counter inflation and a weakening yen added to the caution on Monday. Higher Japanese rates could strengthen the yen and consequently unwind carry trades, popular among investors due to the low yields.
A tick up in sovereign bond yields also pressured stocks, with that on the 10-year benchmark up around three basis points.
Other Market News
Meanwhile, big-box retailers were in the spotlight as Cyber Monday sales kick off later in the day. Shoppers spent a record $11.8 billion online on Black Friday, up 9.1% from 2024 on the year’s biggest shopping day, according to Adobe Analytics. U.S.-listed crypto stocks were big losers as bitcoin fell back below $90,000, extending losses after its steepest monthly decline since the 2021 crypto crash.
Strategy fell 4.6%, Coinbase lost 4.4% and Bitfarms dropped 9.2%. Elon Musk’s Tesla slipped 1.4% after monthly registrations in key European markets slumped from a year earlier. Synopsys jumped 8% after AI chip leader Nvidia said it has invested $2 billion in the semiconductor design software provider.
Conclusion
In conclusion, Wall Street is preparing for a potentially volatile week ahead, with key economic data and the Fed Chair’s speech set to provide clarity on the central bank’s policy decision. Investors will be closely watching the market’s reaction to these events, as well as the performance of big-box retailers on Cyber Monday and the latest developments in the crypto market.
