Nasdaq hits record as investors await Fed rate decision
MicroStrategy rises on Nasdaq 100 inclusion
Crypto stocks rally
Honeywell explores separation of aerospace business
Indexes: Dow off 0.04%, S&P 500 up 0.51%, Nasdaq up 1.23%
Updates to midafternoon trading, adds analyst comment, market details
By Chuck Mikolajczak
NEW YORK, Dec 16 (Reuters) -The Nasdaq hit a record high on Monday and the S&P 500 also rose as investors assessed the latest economic data while awaiting the Federal Reserve's final policy announcement of the year later in the week to gauge the path of interest rates.
Markets have almost completely priced in a rate cut at the conclusion of the Fed's two-day policy meeting on Wednesday, with a 99.1% chance for a cut of 25 basis points (bps), according to CME's FedWatch Tool.
"Maybe the market was a bit oversold last week and with almost a 100% likelihood that the Fed will cut on Wednesday, the only outstanding question is what kind of rhetoric, what kind of notes will investors get regarding guidance," said Sam Stovall, chief investment strategist of CFRA Research in New York.
"It is likely to be a hawkish cut, meaning they will cut rates but the Fed will be talking about how they are still data-dependent and as a result there could be fewer cuts next year than people are thinking."
On the economic front, S&P Global said its flash manufacturing PMI dropped to 48.3 this month, below the 49.8 reading of economists polled by Reuters and the 49.7 in November. In addition, a gauge of factory production hits its lowest level since May 2020 ahead of the prospect of higher tariffs increasing the cost of imported raw materials next year.
The Dow Jones Industrial Average .DJI fell 17.44 points, or 0.04%, to 43,810.62, the S&P 500 .SPX gained 30.77 points, or 0.51%, to 6,081.86 and the Nasdaq Composite .IXIC gained 244.30 points, or 1.23%, to 20,171.03.
The S&P 500 snapped a three-week streak of gains last week and the Dow also fell, while the Nasdaq managed a fourth straight week of gains.
Most megacap and growth stocks traded higher, with Google parent Alphabet GOOGL.O up more than 4% and Tesla TSLA.O up 5.2% to help lift the communication services .SPLRCL and consumer discretionary .SPLRCD sectors. Wedbush Securities raised its price target on Tesla to a Wall Street high of $515.
Both the Nasdaq 100 .NDX and the Nasdaq Composite touched record highs, while the small-cap Russell 2000 .RUT jumped 0.9%.
Ahead of the Fed decision, retail sales data will be eyed on Tuesday for signs of continued strength in the consumer.
The S&P 500 is up 27.5% this year as optimism over growth in artificial intelligence-related companies, the start of the Fed's rate-cutting cycle, a resilient economy and expected pro-business policies from Donald Trump's incoming administration have helped boost equities. The benchmark index is up more than 58% over the past two years, which would mark its strongest two-year period since a 65.9% surge in 1997 and 1998.
Honeywell International HON.O climbed 4.4% after the industrial conglomerate said it was exploring a separation of its aerospace business.
Cryptocurrency stocks rose as bitcoin BTC= jumped above $106,000, continuing its rally since the U.S. presidential election on expectations the new administration will benefit cryptocurrencies, and bitcoin buyer MicroStrategy was set to join the Nasdaq 100 index .NDX.
MicroStrategy MSTR.O advanced 3.2%, while bitcoin miner MARA Holdings MARA.O shot up 8.8%. Super Micro Computer SMCI.O, among those stocks set to be removed from the Nasdaq 100, tumbled 8%.
Advancing issues outnumbered decliners by a 1.02-to-1 ratio on the NYSE and a 1.22-to-1 ratio on the Nasdaq.
The S&P 500 posted 14 new 52-week highs and 15 new lows, while the Nasdaq Composite recorded 96 new highs and 160 new lows.
All eyes on the Fed's last policy meeting of the year https://reut.rs/3VBBXdw
Reporting by Chuck Mikolajczak in New York
Additional reporting by Lisa Mattackal and Purvi Agarwal in Bengaluru
Editing by Matthew Lewis
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