S&P 500 edges down as investors await Fed rate decision
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Traders working on the floor of the New York Stock Exchange, in New York City.
PHOTO: REUTERS
Follow topic:
- Investors anticipate a hawkish Federal Reserve despite expected rate cuts, influencing market sentiment as indicated in the CME FedWatch Tool.
- JP Morgan's warning of US$105 billion in expenses for 2026 impacted the S&P 500 bank index after Marianne Lake's announcement.
- S&P 500 closed slightly lower, with energy leading gains and healthcare declining; Trump allowed Nvidia to ship AI chips to China.
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NEW YORK - The S&P 500 ended the session on Dec 9 slightly lower as investors anticipated that the Federal Reserve would take a hawkish tone even if it cuts interest rates this week, while JP Morgan curbed gains after the biggest US bank warned of hefty expenses for 2026.
The Fed kicked off its two-day policy meeting on Dec 9 with traders widely expecting a quarter-percentage point rate cut despite inflation still running above the central bank’s 2 per cent target.
Policymakers have sent mixed signals about the outlook with some warning that price pressures could easily reaccelerate, while others have been more concerned about the labour market’s health.
And the Dec 9 Labor Department report did little to clear the air as job openings increased marginally in October, but hiring remained subdued.
Separately, a National Federation of Independent Business (NFIB) report showed companies intending to create new jobs in the near future.
“It appears that the bias for the market right now is that you’re going to see a modestly less dovish Fed because of the job openings,” said Mr Jeff Schulze, head of economic and market strategy at ClearBridge.
Traders are still pricing in a roughly 87 per cent chance of a 25-basis-point rate on Dec 10, according to CME’s FedWatch Tool. But Mr Schulze sees “a higher likelihood of a pause after tomorrow’s rate cut.”
Adding to nerves ahead of the Fed’s update - due after its meeting ends on Dec 10 - Mr Justin Bergner, portfolio manager at Gabelli Funds, said that a rally in US Treasury yields was weighing on stocks.
“It’s not surprising the equity rally would stall ahead of the Fed and with bond yields continuing to rally,” said Mr Bergner. The US 10-year Treasury yield was last up on the day at 4.18 per cent, on track for its fourth straight day of gains.
According to preliminary data, the S&P 500 lost 6.19 points, or 0.09 per cent, to end at 6,840.32 points, while the Nasdaq Composite gained 30.58 points, or 0.13 per cent, to 23,577.24.
The Dow Jones Industrial Average fell 174.82 points, or 0.37 per cent, to 47,564.50.
After rising nearly 1 per cent earlier in the day, the S&P 500 bank index weakened after JP Morgan Chase’s consumer and community banking chief Marianne Lake said the bank expects expenses to climb to about US$105 billion (S$136 billion)in 2026, driven largely by growth and volume-related costs.
Among the 11 S&P 500 industry sectors energy led gains during the session, while healthcare was the biggest loser.
Trading in technology shares was also choppy on Dec 9. US President Donald Trump said he would allow Nvidia to ship H200 processors, its second-most powerful AI chips, to China for a 25 per cent fee on those exports. But, a Financial Times report that said Beijing was set to limit access to those chips, while China hardliners in Washington slammed the Trump administration for its decision.
Investor appetite for corporate spending on artificial intelligence infrastructure is likely to face greater scrutiny with results due from Oracle and Broadcom later this week.
Traders also kept an eye on a bidding war between Paramount Skydance and Netflix over Warner Bros .
Among others, Campbell’s shares fell after the packaged-food maker said it selectively raised prices to counter higher costs, while AutoZone fell after its quarterly results missed estimates. REUTERS
