Wall Street stocks inched higher in contrast to world shares on Monday as U.S. Treasury yields eased and investors readied for a busy central bank week.
Bitcoin touched a new high, boosted by President-elect Donald Trump suggesting he plans to set up a bitcoin strategic reserve.
The Federal Open Markets Committee (FOMC) is due to convene on Tuesday for its last monetary policy meeting of 2024, which is expected to conclude with a 25 basis point cut in the key Fed funds target rate.
Investors will scrutinize the Fed’s Summary of Economic Projections (SEC) and its “dot plot,” which maps out the central bank’s future rate cut path, which has become less certain in light of recent data showing sticky inflation amid a relatively robust economy.
A report from S&P Global showed that U.S. business activity has accelerated its expansion this month, despite ongoing weakness in the manufacturing sector.
“The U.S. economy is the best house on the block right now, if you look at Europe, depending on the country it appears to be floundering,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. “And China has its own issues with the various stimulus measures they’re undertaking.”
“It looks like we’re going to get a rate cut in a couple days, and (investors) like the pro-growth agenda that the new administration is putting forth,” Tuz added.
Soft retail sales data from China underscored the need for more aggressive stimulus from Beijing.
The Dow Jones Industrial Average (.DJI), rose 73.61 points, or 0.17%, to 43,904.10, the S&P 500 (.SPX), rose 25.05 points, or 0.41%, to 6,076.14 and the Nasdaq Composite (.IXIC), rose 149.34 points, or 0.75%, to 20,076.25.
French stocks weighed on European markets after Moody’s unexpectedly downgraded the country’s rating on Friday, offsetting signs of easing euro zone business conditions.
MSCI’s gauge of stocks across the globe (.MIWD00000PUS), rose 2.05 points, or 0.24%, to 868.19.
The STOXX 600 (.STOXX), opens new tab index fell 0.12%, while Europe’s broad FTSEurofirst 300 index (.FTEU3), opens new tab fell 1.04 points, or 0.05%
Emerging market stocks (.MSCIEF), fell 2.97 points, or 0.27%, to 1,104.04. MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), closed lower by 0.37%, to 583.21, while Japan’s Nikkei (.N225), fell 12.95 points, or 0.03%, to 39,457.49.
Yields on 10-year U.S. Treasuries eased from three-week highs as investors awaited the Fed’s rate decision on Thursday.
The yield on benchmark U.S. 10-year notes fell 1.8 basis points to 4.381%, from 4.399% late on Friday.
The 30-year bond yield fell 2 basis points to 4.5935% from 4.614% late on Friday.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 1.1 basis points to 4.23%, from 4.241% late on Friday.
Anticipation ahead of the Fed meeting also had the greenback hovering near three-week highs, as investors reconcile themselves to the possibility that the central bank will signal a more measured pace of easing in the coming year.
The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, fell 0.03% to 106.84, with the euro up 0.09% at $1.0511.
Against the Japanese yen , the dollar strengthened 0.4% to 154.26.
Bitcoin, which has surged more than 50% since the U.S. presidential election, touched a new high, topping $106,000 after Trump indicated the possible establishment of a bitcoin reserve fund.
“When I heard (the) idea of establishing a Bitcoin reserve, my first thought was why it’s necessary?” Tuz said. “Who does it help, other than people who are already own Bitcoin or are kind of in the Bitcoin sphere?”
Bitcoin gained 4.00% while Ethereum rose 2.81%.
Crude oil prices eased lower as soft data from China raised fears of softening demand from the world’s largest oil importer.
U.S. crude fell 0.36% to $71.03 a barrel and Brent fell to $74.20 per barrel, down 0.39% on the day.
Gold prices inched higher ahead of the central bank decision.
Spot gold rose 0.27% to $2,655.60 an ounce. U.S. gold futures rose 0.24% to $2,662.50 an ounce.
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