US stocks end lower as investors wait for Fed rate decision

[BENGALURU] Wall Street’s main indexes closed lower on Monday (Dec 8), with most S&P 500 industry sectors in the red, while Treasury yields gained as investors waited nervously for the US Federal Reserve monetary policy update due in two days.

Hopes for a December rate cut were solidified after last week’s data that showed consumer spending increased moderately towards the end of the third quarter.

However, investors are still waiting for clues about future policy moves from what is expected to be the most divided Fed in years.

“It will be hard for the market to find a direction that it wants to follow until after the Fed meeting,” said Carol Schleif, chief market strategist at BMO Private Wealth. “We just came off a really strong earnings season and we won’t have earnings again for another four weeks. The only thing that the market really has to hang its hat on or to point to is the Fed.”

Traders are now pricing in a roughly 89 per cent chance of a 25-basis-point rate cut on Wednesday, according to the CME’s FedWatch Tool.

Meanwhile, higher yields on US Treasury bonds also put some pressure on equities. The US 10-year Treasury yield rose soon after a powerful earthquake struck off the coast of Japan before US stock trading had opened.

The Dow Jones Industrial Average fell 215.67 points, or 0.45 per cent, to 47,739.32, the S&P 500 lost 23.89 points, or 0.35 per cent, to 6,846.51 and the Nasdaq Composite lost 32.22 points, or 0.14 per cent, to 23,545.90.

In individual stocks, Paramount Skydance’s hostile US$108.4 billion bid to buy Warner Bros Discovery garnered investor attention as it aimed to outbid Netflix. The bid sent shares of Warner Bros Discovery up 4.4 per cent, while Paramount’s shares jumped 9 per cent and Netflix stock dropped 3.4 per cent.

Netflix was among the major drags on the S&P 500 Communication Services Index, which closed down 1.8 per cent and was the biggest laggard of the benchmark’s 11 major industry sectors.

The sole advancing sector was technology, which added 0.9 per cent with boosts from Microsoft, Nvidia and Broadcom.

Later this week, the focus will shift to tech sector valuations, with earnings reports due from Broadcom and Oracle, as investors have been worried about debt-funded artificial intelligence (AI) spending. In a move that BMO’s Schleif said was positive for AI-related companies, US President Donald Trump said he would sign an executive order this week to create a single national rule for AI.

Technology companies have been looking to override disparate laws passed by US states.

However, Google parent Alphabet still ended down more than 2 per cent, marking the biggest drag on the communications services index, followed by Meta Platforms. Elsewhere, chipmaker Marvell Technology shares dropped 7 per cent after used-car dealer Carvana beat it to securing a spot in the S&P 500. Carvana shares finished up 12 per cent after the decision.

Confluent shares soared 29 per cent after IBM said that it will acquire the data-infrastructure company for about US$11 billion. IBM shares ended up a modest 0.4 per cent.

Tesla ended down 3 per cent following Morgan Stanley’s bearish view on the electric-vehicle maker. Also on Monday, Oppenheimer forecast a Street-high year-end 2026 target of 8,100 points for the S&P 500, citing strong earnings and macro resilience.

Declining issues outnumbered advancers by a 2.04-to-1 ratio on the NYSE, where there were 167 new highs and 68 new lows.

On the Nasdaq, 2,092 stocks rose and 2,672 fell as declining issues outnumbered advancers by a 1.28-to-1 ratio. The S&P 500 posted 20 new 52-week highs and 10 new lows, while the Nasdaq Composite recorded 149 new highs and 79 new lows.

On US exchanges, 16.12 billion shares changed hands, compared with the 17.52 billion average for the last 20 sessions. REUTERS