Market Overview
The S&P 500 Index ($SPX) and the ETF SPY (SPY) ended Monday down by -0.35%. The Dow Jones Industrial Average ($DOWI) and the ETF DIA (DIA) fell by -0.45%, while the Nasdaq 100 Index ($IUXX) and the ETF QQQ (QQQ) saw a decrease of -0.25%. Additionally, December E-mini S&P futures (ESZ25) fell -0.35%, with December E-mini Nasdaq futures (NQZ25) down -0.27%.
Market Influences
Stock indexes fell mainly due to rising bond yields, with the 10-year T-note yield reaching a 2.25-month high of 4.19% before closing slightly lower at 4.17%. Expectations of the Federal Reserve cutting interest rates following the upcoming FOMC meeting are providing some support for stocks. December is generally a favorable month for stocks, which adds to this optimism. Additionally, strong performance from chip stocks helped mitigate losses in the Nasdaq 100.
Corporate Developments
M&A activity and favorable corporate news also bolstered the market. Confluent surged over +29% after being acquired by IBM for approximately $11 billion. Carvana saw a gain of over +12% when S&P Dow Jones Indices announced it would replace LKQ Corp in the S&P 500.
Upcoming Economic Reports
This week, the market’s focus will shift to government reports and the FOMC meeting. Job openings for October are expected to rise by 7,150, while the Q3 employment cost index is projected to increase by +0.9%. The FOMC meeting could result in a -25 basis point cut in the federal funds target range, with particular attention on post-meeting remarks from Fed Chair Powell regarding future interest rates.
Global Market Performance
Last Monday, global markets exhibited mixed signals. The Euro Stoxx 50 saw a slight gain of +0.03%. China’s Shanghai Composite climbed to a two-week peak, closing up +0.54%, while Japan’s Nikkei Stock 225 ended the day with a +0.18% increase.
Interest Rate Trends
March 10-year T-notes (ZNH6) closed down -8.5 ticks, with yields rising to a 2.25-month high. The Treasury is set to auction $119 billion in T-notes and T-bonds this week, which is exerting downward pressure on prices. In Europe, German bund and UK gilt yields also increased, reaching multi-month highs.
Stock Movers
Chip manufacturers provided some upward momentum on Monday. Companies like Micron Technology and ON Semiconductor saw gains of over +4% and +3%, respectively. Conversely, Air Products and Chemicals led the losses in the S&P 500 with a drop of over -9%. Other companies such as Tesla and Marvell Technology also faced declines due to downgrades from financial institutions.
