US stocks close lower as yields climb; crypto stocks drop

NEW YORK - US stocks closed modestly lower on Dec 1, weighed down by a jump in Treasury yields and economic data that showed tariffs remained a drag on the manufacturing sector, as investors looked toward the Federal Reserve’s policy announcement next week.

The Institute for Supply Management’s survey showed US manufacturing contracted for a ninth straight month in November, as factories dealt with slumping orders and higher prices as the effect from tariffs lingered.

Markets have largely priced in a rate cut from the Fed at the conclusion of its two-day policy meeting on Dec 10. They are pricing in an 85.4 per cent chance of a 25 basis-point cut, according to CME’s FedWatch Tool.

“The market actually is still obviously earnings-driven, we went through earnings season, but now it’s the Fed,” said Mr Joe Saluzzi, partner, co-founder and head of Equity Market Structure Research and co-head of Equity Trading at Themis Trading in Chatham, New Jersey.

“I see no reason why the uptrend doesn’t continue, at least, not as quickly, but maybe more of a grind up to the end of the year.” The Dow Jones Industrial Average fell 427.09 points, or 0.9 per cent, to 47,289.33, the S&P 500 lost 36.46 points, or 0.53 per cent, to 6,812.63 and the Nasdaq Composite lost 89.76 points, or 0.38 per cent, to 23,275.92.

While many policymakers have struck a cautious tone, dovish signals from a few key voting members in recent weeks, along with reports that White House economic adviser Kevin Hassett is a leading contender to succeed Fed Chair Jerome Powell, have heightened expectations for further monetary easing in the months ahead.

Mr Powell was scheduled to speak after the market close but was unlikely to address monetary policy due to the proximity to the central bank’s policy meeting.

“I guess they’ll look for hints of anything that he could say, but it looks like it’s a done deal,” said Mr Saluzzi.

Investors are also waiting for a delayed September report on the Personal Consumption Expenditures Price Index, the Fed’s preferred inflation gauge, due on Dec 5. Despite expectations for a cut, US Treasury yields were higher on Dec 1 following weakness in Japanese and European government bonds in the wake of comments from Bank of Japan Governor Kazuo Ueda, who signaled that conditions were aligning for a possible rate hike. Bond yields move inversely to prices.

The rise in yields weighed on S&P 500 sectors such as real estate and utilities, which are seen by many investors as bond proxies. Coinbase, which ended down 4.8 per cent, and US-listed shares of Bitfarms, off 5.7 per cent, were among the crypto stocks that showed significant weakness, as bitcoin stumbled nearly 6 per cnet and at one point dropped below US$85,000 (S$110,000).

The crypto market has lost more than US$1 trillion in value since hitting a record of around US$4.3 trillion, according to CoinGecko.

Strategy, the world’s largest holder of the cryptocurrency, ended 3.3 per cent lower after tumbling as much as 12 per cent.

It cut its earnings forecast for 2025, citing a weak run in bitcoin. Big-box retailers were in focus on Cyber Monday, with shoppers expected to spend US$14.2 billion online, according to Adobe Analytics.

Shares of Walmart and Target advanced 0.9 per cent and 0.8 per cent, respectively. The S&P 500 retail index edged up 0.2 per cent. Synopsys shares closed 4.9 per cent higher after AI chip leader Nvidia said it had invested US$2 billion in the semiconductor design software provider.

Declining issues outnumbered advancers by a 1.86-to-1 ratio on the NYSE and by a 2.33-to-1 ratio on the Nasdaq.

The S&P 500 posted 17 new 52-week highs and one new low, while the Nasdaq Composite recorded 76 new highs and 78 new lows.

Volume on US exchanges was 15.64 billion shares, compared with the 18.64 billion average for the full session over the last 20 trading days. REUTERS