S&P 500, Nasdaq rise on optimism ahead of rate cut, economic data
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MicroStrategy rises on Nasdaq 100 inclusion
Honeywell explores separation of aerospace business
Indexes: Dow off 0.02%, S&P 500 up 0.22%, Nasdaq up 0.41%
Updates after markets open
By Lisa Pauline Mattackal and Purvi Agarwal
Dec 16 (Reuters) - The S&P 500 and the Nasdaq climbed while the Dow was flat onMonday, as investors looked ahead to an anticipated Federal Reserve interest rate cut later in the week, as well as several key data releases that will help set the tone for policy next year.
The Fed's final rate decision of the year is due on Wednesday, with traders pricing in an over 97% chance of a 25 basis point rate reduction, as per CME's FedWatch.
However, the primary focus will be on policymakers' outlook for next year, with an updated "dot plot" of forecasts also to be released, as bets moderate on the pace of rate cuts amid strong economic growth and persistent inflation.
"The market's hungry for more cuts and the Fed's left with a task of juggling - is this doable without creating inflationary pressure?" said Andre Bakhos, managing member at Ingenium Analytics.
"The odds favor the enthusiasm," Bakhos said.
S&P Global's December flash PMI showed manufacturing activity stood at 48.3, compared with estimates of 49.8 according to economists polled by Reuters, while services activity stood at 58.5, above estimates of 55.7.
On the data docket are industrial production figures, retail sales, and personal consumption expenditure data scheduled throughout the week.
At 9:46 a.m. ET, theDow Jones Industrial Average .DJI fell 8.81 points, or 0.02%, to 43,819.25, the S&P 500 .SPX gained 13.34 points, or 0.22%, to 6,064.47 and the Nasdaq Composite .IXIC gained 82.02 points, or 0.41%, to 20,009.17.
Most megacap and growth stocks traded higher, with Google-parent Alphabet GOOGL.O up 2.1% and Amazon.com AMZN.O rising 1%, boosting communication services .SPLRCL and consumer discretionary .SPLRCD sectors 1% and 0.7% respectively.
Yields on Treasuries inched lower across the board, with the ones on the benchmark 10-year bond US10YT=RR easing from an over three-week high hit on Friday. It was last at 4.3770%.
Crypotocurrency stocks rose as bitcoin BTC= briefly jumped above $106,000 after President-elect Donald Trumpsuggested he plans to create a U.S. bitcoin strategic reserve similar to its strategic oil reserve.
Coinbase Global COIN.O rose 3.7% and bitcoin miner MARA Holdings MARA.O gained 4.9%.
The benchmark S&P 500 and the blue-chip Dow ended the previous week lower, while the tech-heavy Nasdaq clocked its fourth straight week of gains after breaching the 20,000 mark for the first time.
Still, stocks have had a bumper run in 2024 as gains in artificial intelligence-related companies,the start of the Fed's rate cutting cycle and expected pro-business policies from Trump's incoming administration have lifted equities.
Shares of MicroStrategy MSTR.O rose 2.6% as the software company and bitcoin buyer was set to join the Nasdaq 100 index .NDX. Super Micro Computer SMCI.O, among those set to be removed from the index, dropped 7.1%.The changes will take effect on Dec. 23.
Honeywell International HON.O gained 1.8% after the industrial conglomerate said it was exploring a separation of its aerospace business.
Declining issues outnumbered advancers by a 1.04-to-1 ratio on the NYSE and by a 1.03-to-1 ratio on the Nasdaq.
The S&P 500 posted nine new 52-week highs and 12 new lows, while the Nasdaq Composite recorded 50 new highs and 88 new lows.
The Fed’s dot plot https://reut.rs/3VwBadS
Reporting by Lisa Mattackal and Purvi Agarwal in Bengaluru; Editing by Maju Samuel
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