Stock Market Update

[BRIEFING.COM] The S&P 500 (+0.2%) and Nasdaq Composite (+1.0%) started December with record highs while the Dow Jones Industrial Average declined 0.3%. The mixed action at the index level reflected a lack of strong conviction on either side of the tape. Decliners led advancers by a 4-to-3 margin at the NYSE, but advancers had an 11-to-10 lead over decliners at the Nasdaq.

Gains in chipmakers, which responded to better-than-feared export restrictions on semiconductors and semiconductor equipment to China, and in mega caps propelled the S&P 500 and Nasdaq Composite higher. 

This price action also drove the S&P 500 communication services (+1.5%), consumer discretionary (+1.1%), and information technology (+1.0%) sectors to close higher while the remaining eight sectors registered losses ranging from 0.1% (consumer staples) to 2.1% (utilities). 

Intel (INTC 23.93, -0.12, -0.5%) was a story stock from the semiconductor space, initially trading up as much as 5.9% before closing lower following news that CEO Pat Gelsinger is out and the company will be led by interim co-CEOs until a new CEO is hired.

The market received news of further developments in the Middle East, but stocks, bonds, and commodities didn't react much. President-elect Trump warned in a Truth Social post of consequences if Middle East hostages are not released. Also, The New York Times reported that Israel and Hezbollah have traded fire with both sides accusing the other of violating the ceasefire deal.

Treasuries, which can benefit from safe-haven buying during geopolitical tension, settled with losses, leaving the 10-yr yield two basis points higher at 4.20%. Oil prices, which can increase when worries about supply chain disruptions are piqued, settled little changed from Friday ($68.07/bbl, +$0.18, +0.3%). 

The S&P 500 and Nasdaq Composite remained near session highs following the headlines. 

There was also some Fedspeak in the mix today, but the equity market didn't react much to that, either. Atlanta Fed President Bostic (FOMC voter) said in a speech that "conditions on both sides of the Fed's mandate appear to be broadly healthy" and Fed Governor Waller said he is leaning toward supporting a cut to the policy rate at the December FOMC meeting. 

The fed funds futures market did react to this, pricing in a 79.0% probability of a 25 basis points rate cut at the December FOMC meeting, up from 66.0% one day ago and 52.3% a week ago, according to the CME FedWatch Tool. 

Separately, the dollar built up strength today, leading the US Dollar Index to move 0.7% higher to 106.46. This move relates to President-elect Trump saying he would impose 100% tariffs on countries moving away from the dollar as the world's reserve currency.

• Nasdaq Composite: +29.3%
• S&P 500: +26.8%
• S&P Midcap 400: +20.7%
• Russell 2000: +20.1%
• Dow Jones Industrial Average: +18.8%

Reviewing today's economic data:

• November S&P Global US Manufacturing PMI - Final 49.7; Prior 48.5
• November ISM Manufacturing Index 48.4% (Briefing.com consensus 47.6%); Prior 46.5%
  • The key takeaway from the report is that manufacturing sector activity overall continues to be weak, but showed a green shoot with the new orders index returning to expansion territory after seven straight months of contraction.
• October Construction Spending 0.4% (Briefing.com consensus 0.1%); Prior 0.1%
  • The key takeaway from the report is that residential construction activity rebounded nicely, led by single family construction.

Looking ahead, Tuesday's economic data is limited to the October JOLTS Jobs Openings report at 10:00 ET.