The Nasdaq (QQQ) surged to a record high on Monday, closing up 1.24% as investors positioned themselves ahead of the Federal Reserve's final policy meeting of the year. The S&P 500 (SPY) also posted gains, rising 0.38%, while the Dow Jones Industrial Average (DIA) fell for the eighth consecutive session. Markets have overwhelmingly priced in a 25 basis-point rate cut at the conclusion of the Fed's two-day meeting, but investors remain focused on the central bank's guidance for 2025.
Economic data released earlier in the day highlighted challenges in the manufacturing sector, with S&P Global’s flash manufacturing PMI falling to 48.3, the lowest since May 2020. Weak factory production, coupled with concerns over potential tariffs on imported raw materials, underscores the pressures facing the economy. Analysts expect the Fed to deliver a "hawkish cut," signaling near-term rate relief while emphasizing a cautious, data-dependent stance on further easing.
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Market Overview
- Nasdaq closed at a record high, up 1.24%, while the S&P 500 gained 0.38%.
- Dow Jones fell 0.25%, marking its eighth straight losing session.
- Manufacturing PMI dropped to 48.3, indicating contraction in the sector.
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Key Points
- The Fed is expected to cut rates by 25 basis points this week.
- Economic challenges include weak factory output and tariff concerns.
- Investors await Fed guidance on 2025 rate cuts and economic outlook.
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Looking Ahead
- The Fed’s rhetoric will shape market expectations for 2025 rate policies.
- Potential tariffs could further impact raw material costs and factory output.
- Market resilience hinges on continued strength in tech-heavy Nasdaq stocks.
The Nasdaq's record close reflects growing optimism among investors despite ongoing economic headwinds. Anticipation of near-term rate cuts, coupled with strong performances from technology stocks, has positioned the index as a standout amid broader market uncertainty.
As the Fed’s decision looms, its commentary on inflation, growth, and monetary policy will heavily influence market sentiment heading into 2025. Investors remain focused on balancing opportunities in growth sectors with risks tied to economic challenges and policy shifts.
