On Monday, Wall Street equities edged upwards, contrasting with global shares, as U.S. Treasury yields slipped and investors prepared for a week filled with central bank activities.
Bitcoin reached a fresh peak, propelled by comments from President-elect Donald Trump about his intention to establish a bitcoin strategic reserve.
The Federal Open Markets Committee (FOMC) is set to meet on Tuesday for its final monetary policy discussion of 2024, anticipated to wrap up with a 25 basis point reduction in the main Fed funds target rate.
Market participants will closely examine the Fed’s Summary of Economic Projections (SEC) and its “dot plot,” which outlines the central bank’s prospective rate-cut trajectory, now rendered less predictable due to recent indicators of persistent inflation amidst a relatively strong economy.
According to a report from S&P Global, U.S. business activity has gained momentum this month, even as the manufacturing sector continues to struggle.
“The U.S. economy currently stands out in comparison to Europe, where conditions seem to be deteriorating in various countries,” remarked Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. “China, too, is grappling with its challenges stemming from a variety of stimulus initiatives.”
“It appears we are on the verge of a rate cut within a couple of days, and (investors) are optimistic about the pro-growth policies being introduced by the incoming administration,” Tuz noted.
Weak retail sales figures from China highlighted the necessity for more substantial stimulus measures from Beijing.
The Dow Jones Industrial Average (.DJI) climbed 73.61 points, or 0.17%, reaching 43,904.10; the S&P 500 (.SPX) increased by 25.05 points, or 0.41%, to 6,076.14; and the Nasdaq Composite (.IXIC) rose 149.34 points, or 0.75%, to 20,076.25.
French equities pressured European markets after Moody’s unexpectedly downgraded the nation’s rating on Friday, negating signs of improving conditions in the euro zone.
MSCI’s measure of global stocks (.MIWD00000PUS) advanced by 2.05 points, or 0.24%, to 868.19.
The STOXX 600 (.STOXX) index dipped 0.12%, while Europe’s wider FTSEurofirst 300 index (.FTEU3) fell by 1.04 points, or 0.05%.
Emerging market equities (.MSCIEF) decreased by 2.97 points, or 0.27%, to 1,104.04. MSCI’s broadest index of Asia-Pacific shares excluding Japan (.MIAPJ0000PUS) ended down 0.37% at 583.21, while Japan’s Nikkei (.N225) lost 12.95 points, or 0.03%, closing at 39,457.49.
Yields on 10-year U.S. Treasuries retreated from three-week peaks as investors anticipated the Fed’s rate decision scheduled for Thursday.
The yield on the benchmark U.S. 10-year notes dropped 1.8 basis points to 4.381%, down from 4.399% at the close on Friday.
The yield on the 30-year bond decreased by 2 basis points to 4.5935% from 4.614% late Friday.
The 2-year note yield, closely tied to expectations regarding Federal Reserve interest rates, fell 1.1 basis points to 4.23%, down from 4.241% late Friday.
As anticipation builds for the Fed meeting, the dollar remained near three-week highs while investors adjusted to the potential for the central bank to indicate a slower pace of easing in the months ahead.
The dollar index, which compares the greenback against a collection of currencies including the yen and euro, dipped 0.03% to 106.84, with the euro rising 0.09% to $1.0511.
The dollar strengthened by 0.4% against the Japanese yen, reaching 154.26.
Bitcoin, which has skyrocketed over 50% since the U.S. presidential election, achieved a new record by surpassing $106,000 after Trump signaled the potential creation of a bitcoin reserve fund.
“When I first heard the concept of establishing a Bitcoin reserve, my immediate thought was who benefits from it?” Tuz said. “Who gains from this, apart from those already owning Bitcoin or involved in the Bitcoin community?”
Bitcoin advanced by 4.00%, while Ethereum increased by 2.81%.
Crude oil prices dipped as disappointing data from China raised concerns about waning demand from the globe’s largest oil consumer.
U.S. crude fell by 0.36% to $71.03 per barrel, while Brent decreased to $74.20 per barrel, down 0.39% for the day.
Gold prices slightly increased ahead of the central bank’s decision.
Spot gold rose 0.27% to $2,655.60 an ounce, and U.S. gold futures gained 0.24% to $2,662.50 an ounce.
