THE Dow finished at an all-time record on Monday while the Nasdaq retreated as markets weighed competing potential outcomes for an upcoming Federal Reserve decision.
Investors widely expect the Fed to cut interest rates on Wednesday for the first time since March 2020. But markets are not sure whether to expect a 25 basis point cut or the more aggressive 50 basis point cut.
Investors also aren’t sure how the market will react to whatever the Fed does, with some postulating that “you could see a sell-the-news type situation” in light of the gains in recent days, said Briefing.com analyst Patrick O’Hare.
The Dow Jones Industrial Average ended up 0.6 per cent at 41,622.08, an all-time high.
The broad-based S&P 500 edged up 0.1 per cent to 5,633.09, while the tech-rich Nasdaq Composite Index declined 0.5 per cent to 17,592.13
The Fed started hiking rates in 2022 in response to a surge in inflation, fueled largely by a post-pandemic supply crunch and the war in Ukraine.
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Now, with inflation falling, the labour market cooling, and the US economy still growing, policymakers have decided that conditions are ripe for a cut.
Besides Wednesday’s decision, markets will also be looking at the Fed’s medium-term forecast for additional interest rate cuts in 2024 and 2025.
Among individual companies, Apple fell 2.8 per cent amid reports of tepid demand for the tech giant’s latest iPhone model.
But Intel jumped 6.4 per cent following a Bloomberg report that it is close to winning a US$3.5 billion Pentagon contract for chip manufacturing. AFP
