Stocks drop as traders wait for Fed decision
Stocks traded lower on Monday as the S&P 500 stabilized below last week’s all-time high as traders awaited a monetary policy decision from the Federal Reserve later this week.
All three major indices fell. US crude oil prices fell to trade at close to $ 71 a barrel. Yields on Treasuries fell on the long end of the curve and the benchmark 10-year yield remained below 1.5%. Bitcoin prices fell to trade below $ 48,000.
Shares of the heavily weighted component of the US Apple Stock Index (AAPL) contributed to the gains to set a new all-time intraday high. The stock’s market cap was close to $ 3 trillion and was less than 2% of that level at Friday’s close.
Investors this week will focus on the Federal Reserve’s policy-making meeting in December, which will take place between Tuesday and Wednesday. A new monetary policy statement and press conference with Fed Chairman Jerome Powell is expected mid-week, along with the updated summary of the Fed’s economic projections outlining each member’s outlook for economic conditions and interest rates. Policymakers from other central banks are also expected to meet this week, including those from the Bank of England and the European Central Bank.
The Fed’s move has taken on added significance as the market tries to predict how policymakers will weigh still-high inflation against the specter of a new wave of coronavirus with the newly discovered Omicron variant. U.S. inflation rose at its fastest pace since 1982 in November, according to the Consumer Price Index (CPI) last week, indicating the persistent mismatch between supply and demand in the economy in recovery.
On the virus front, the Omicron variant has so far been detected in 30 states, according to data compiled by the New York Times. The first data to date has suggested that the variant is more transmissible than the earlier Delta variant, but may cause less severe disease and be able to be neutralized by a booster dose of the COVID-19 vaccine, according to Pfizer. On Monday, the World Health Organization said the Omicron variant remains a “very high” global risk, while stressing that data on the severity of the disease is still limited.
But in a context of inflation and a strengthening of the economic recovery, the Fed is expected to announce an acceleration of its process of reducing asset purchases at the end of this week’s meeting, recalling one of the key tools of the central bank which had helped support the economy during the pandemic.
âEquity and fixed income markets appear to be predicting the next Fed tightening,â wrote David Kostin, chief US equity strategist at Goldman Sachs, in a note.
The firm expects the Fed to double the pace of the cut at this week’s meeting, bringing the Fed’s monthly withdrawal from treasury bills and agency mortgage-backed securities purchases to 30 billion dollars per month against the current rate of 15 billion dollars.
âHistorical experience suggests that stock valuations are generally stable around the first Fed hike,â Kostin added. Additionally, some of the longest and most valued stocks have plunged over the past month, suggesting that the market price of the Fed’s tightening stocks is also on the move.
11:17 a.m. ET: USPS expects 2.3 billion mail items to be delivered this week in peak season
the U.S. Post announced on Monday that it expects 2.3 billion pieces of mail to be delivered during the week of December 13, underscoring the increased demand for shopping and shipping this holiday season. The USPS estimate includes both greeting cards and packages.
âSince Dec. 6, customer traffic at all post offices has been steadily increasing,â the USPS said in a press release. “But this week is set to be the busiest week of the holiday shipping and shipping season.”
Between Thanksgiving and New Years Day, about 850 to 950 million packages are expected to be delivered in total, the USPS said.
10:03 am ET: Apple hits intraday high, closes $ 3 trillion market cap
Apple shares rose in intraday trading, countering the downtrend in the broader market to move closer to a market cap of $ 3 trillion. At the high of the session, Apple shares were trading at $ 181.80, or about 0.6% of the share price, which would push its market cap to $ 3 trillion.
The iPhone maker had become the first US company to reach a market cap of $ 2 trillion in August 2020. Counterpart tech giant Microsoft has also since climbed to a valuation of more than $ 2 trillion.
Apple shares have gained more than 36% so far this year, outpacing the S&P 500’s gain of around 24.9% during that period. This comes on top of Apple’s 81% gain in 2020.
9:33 am ET: Stocks open slightly lower
Here’s where the markets were trading right after the opening bell:
S&P 500 (^ GSPC): -5.26 (-0.11%) to 4,706.76
Dow (^ DJI): -5.26 (-0.08%) to 35,943.90
Nasdaq (^ IXIC): -35.94 (-0.23%) to 15,591.80
Raw (CL = F): $ -0.44 (-0.61%) to $ 71.23 per barrel
Gold (CG = F): +1.90 $ (+ 0.11%) to $ 1,786.70 per ounce
10-year cash flow (^ TNX): -4.1 bps for a yield of 1.448%
7:44 a.m. ET Monday: Stock futures rise
Here are the main moves in the markets ahead of Monday’s opening bell:
S&P 500 Futures Contracts (ES = F): +10 points (+ 0.21%), at 4,721.00
Dow Futures (YM = F): +18 points (+ 0.05%), at 35,985.00
Nasdaq Futures (NQ = F): +64.5 points (+ 0.39%) to 16,394.25
Raw (CL = F): $ -0.69 (-0.96%) to $ 70.98 per barrel
Gold (CG = F): + $ 5.60 (+ 0.31%) to $ 1,790.40 per ounce
10-year cash flow (^ TNX): -1.7 bps for a yield of 1.472%
Emily McCormick is a reporter for Yahoo Finance. Follow her on twitter