Markets displayed a mixed performance on Monday as investors braced for the Federal Reserve’s final policy meeting of 2024. The Nasdaq Composite surged to a new all-time high, driven by gains in major tech stocks like Apple, Alphabet, and Broadcom, which posted double-digit growth on strong AI demand. In contrast, the Dow Jones Industrial Average extended its losing streak to an eighth session, marking its longest run of declines since 2018. The S&P 500 also edged higher, supported by record-breaking performances in tech and consumer discretionary sectors. With traders anticipating a widely expected rate cut, market participants are keenly focused on the Fed’s forward guidance and its implications for 2025.

Key Takeaways:

  • Nasdaq Composite Hits Record High on Broadcom Surge: The Nasdaq Composite climbed 1.24% to close at 20,173.89, marking a new all-time high. The rally was driven by strong performances in major tech names, including Broadcom. Shares of Apple, Alphabet, and Tesla also reached fresh record highs, solidifying tech as the driving force behind the Nasdaq’s gains.
  • Dow Jones Falls for Eighth Straight Session: The Dow Jones Industrial Average dropped 110.58 points, or 0.25%, to close at 43,717.48, extending its losing streak to an eighth day – the longest since 2018. Weakness in healthcare stocks weighed heavily, adding to investor caution ahead of the Federal Reserve’s decision.
  • S&P 500 Gains Amid Record-Breaking Tech Sector: The S&P 500 advanced 0.38%, ending the session at 6,074.08. Gains in the index were led by the tech and consumer discretionary sectors, both of which closed at record highs. However, losses in energy stocks tempered broader market gains.
  • European Markets Close Lower Amid Credit Downgrades and Mixed Debuts: The Stoxx 600 fell 0.14%. France’s CAC 40 shed 0.79% after Moody’s downgraded the country’s credit rating to Aa3, while the FTSE 100 lost 0.46%, closing at 8,262.05. German markets saw political turbulence as Chancellor Olaf Scholz lost a confidence vote, with the DAX finishing 0.4% lower at 20,330. Meanwhile, media conglomerate Vivendi spun off Canal+, Hachette Group, and Havas in a major listing move, with Canal+ shares debuting on the London Stock Exchange but falling 22% by close. 
  • Asia-Pacific Markets Slide Amid Weak China Data: Asian markets turned lower after early gains, with Hong Kong’s Hang Seng index leading losses, falling 1% in the final hour of trade. Mainland China’s CSI 300 declined 0.54% to 3,911.84, as November retail sales disappointed, rising just 3% year-on-year against a 4.6% forecast. South Korea’s Kospi fell 0.22% to 2,488.97, while Japan’s Nikkei 225 slipped marginally to 39,457.49. Meanwhile, Australia’s S&P/ASX 200 dropped 0.56% to 8,249.5, extending its losing streak to five sessions.
  • Oil Prices Slide on Weak China Data and Fed Uncertainty: Oil futures retreated from recent highs, with Brent crude falling 0.8% to settle at $73.91 per barrel, while West Texas Intermediate (WTI) slipped 0.8% to close at $70.71. Weak consumer spending data from China, coupled with investor caution ahead of the Federal Reserve’s policy decision, weighed on sentiment. 
  • Bitcoin Surges to Near $108,000 Record: Bitcoin rallied to a new all-time high, climbing as much as 3% to reach $107,857.79 before closing near $106,850.74. Ether followed suit, breaking through the $4,000 level with a 1% gain. The broader crypto market, as measured by the CoinDesk 20 Index, advanced 2.8%, while Coinbase shares rose 4%. MicroStrategy gained 6% after announcing it will join the Nasdaq-100 index later this month and revealed the purchase of an additional 15,350 BTC, bringing its holdings to 439,000, worth approximately $46 billion.
  • Treasury Yields Steady Ahead of Fed Policy Decision: U.S. Treasury yields were little changed, with the 10-year yield slipping just below 4.4%, closing at 4.397%. The 2-year Treasury yield ticked up slightly to 4.247%. Investors remain focused on the Federal Reserve’s two-day meeting, where markets are pricing in a 99% chance of a 25-basis-point rate cut.
  • PMIs Reflect Mixed Economic Signals Across Major Economies: The Eurozone Manufacturing PMI steadied at 45.2 in December, slightly above the expected 45.0, while the Services PMI rose to 51.4, hitting a two-month high. Germany’s composite PMI improved to 47.8 from 47.2, and France’s Services PMI rose to 48.2 from 46.9, though both remained in contraction territory. In the US, the Manufacturing PMI declined to 48.3 from 49.7, indicating further contraction in the sector, while the Services PMI climbed to 58.5, marking its highest level in 2024 and driving the Composite PMI to an improved 56.6 from 54.9 in November. 

FX Today:

  • EUR/USD Struggles Amid Sideways Momentum: The EUR/USD pair traded at 1.0508, displaying little momentum as it remains trapped in a narrow range. The pair struggled to break above the 50-period SMA at 1.0527, reflecting ongoing bearish pressure. Resistance near the 100-SMA at 1.0518 and the 200-SMA at 1.0603 reinforces the downtrend that has persisted since mid-November. On the downside, immediate support lies at 1.0480, with further losses potentially targeting the key psychological level of 1.0450. A break below this could open the door to 1.0400. Conversely, any upward move above 1.0550 might signal the start of a recovery, with targets at 1.0600 and beyond.
  • GBP/USD Rebounds but Faces Strong Resistance: The GBP/USD pair traded at 1.2683, posting a modest gain of 0.01%. Following a sharp pullback earlier in the week, the pair found solid support near the 1.2650 mark, aligning with previous lows. However, resistance remains heavy, with the 200-period SMA at 1.2743 acting as a ceiling. Additional congestion at the 50- and 100-period SMAs at 1.2722 and 1.2678, respectively, adds to the hurdles for bullish momentum. A decisive move above 1.2700 could open the path to 1.2750, with further upside targeting 1.2800. On the downside, a breach below 1.2650 could trigger declines toward the psychological 1.2600 level, with deeper corrections targeting 1.2550.
  • USD/JPY Maintains Bullish Momentum, Eyes 155.00: USD/JPY traded at 154.10, slightly down by 0.03% but retaining its strong upward trajectory. The pair has recovered sharply from recent lows near 148.00, driven by broad US dollar strength and rising Treasury yields. Technical indicators show support at the 50-SMA and 100-SMA, both positioned near 151.70, while resistance at the 154.50 region could lead to a test of the psychological 155.00 level. Sustained gains above this mark could propel the pair toward 156.00, though overbought RSI levels warrant caution. On the downside, initial support lies at 152.00, with a deeper correction potentially targeting 151.00.
  • Gold Steady Ahead of Fed Decision: Gold prices traded at $2,652.75, up 0.03%, stabilising after recent declines. The precious metal remains under pressure, with resistance at the 50-SMA ($2,666.37) and 100-SMA ($2,657.60) capping upward movement. A decisive push above $2,660 is required for bulls to reclaim control, potentially targeting $2,680 and $2,700. On the downside, support at $2,640 remains critical, with a breach below this level likely to trigger further declines toward $2,600.

Market Movers:

  • Broadcom Soars on AI Sales Forecast: Broadcom (AVGO) surged 11%, leading gains in the S&P 500 and Nasdaq, as investors cheered the company’s strong AI-driven outlook. Broadcom forecasted a 65% increase in AI product sales for the fiscal first quarter, boosting its momentum. The stock has now added 35% over the past two sessions, after topping a $1 trillion market valuation last week.
  • Micron Technology Rallies on Earnings Optimism: Micron Technology (MU) rose more than 5% as investors anticipated its adjusted earnings for Wednesday may have tripled. The bullish sentiment was further supported by news that Micron secured $6.2 billion in federal subsidies.
  • Red Cat Holdings Skyrockets on Palantir Partnership: Red Cat Holdings (RCAT) soared 25% after announcing a strategic partnership with Palantir Technologies. The collaboration increased investor optimism, driving the stock to one of its largest single-day gains this year.
  • Edgewise Therapeutics Rallies on Trial Success: Edgewise Therapeutics (EWTX) surged 18.4% after reporting positive results from its Phase 2 trial of sevasemten for Becker muscular dystrophy. The trial successfully met its primary endpoint, boosting hopes for the drug’s potential market approval.
  • Super Micro Computer Slides on Nasdaq Removal: Super Micro Computer (SMCI) fell 8%, leading losses in the S&P 500 and Nasdaq 100, after Nasdaq announced the stock would be removed from the Nasdaq-100 on December 23. 
  • PBF Energy Declines on Downgrade: PBF Energy (PBF) slipped 4.1% after Mizuho Securities downgraded the stock to “underperform” from “neutral,” with a price target of $31. The downgrade reflects concerns about the company’s near-term growth prospects.

As markets navigate a pivotal week, investors continue to digest mixed signals from economic data and anticipation of the Federal Reserve’s final policy meeting of the year. The Nasdaq reached a new all-time high, propelled by stellar performances in tech stocks like Broadcom and Apple, while the Dow extended its losing streak to an eighth session. European markets struggled under pressure from credit downgrades and political uncertainty, with autos and luxury goods dragging indices lower. In Asia, disappointing Chinese retail sales and lingering political concerns weighed on sentiment, while gold prices and oil remained subdued ahead of critical policy decisions. With the Fed widely expected to cut interest rates, traders are now focused on forward guidance, which will shape market direction into the new year.