U.S. stock markets closed mixed on Monday as market participants remained mainly side-tracked before the last significant week of the third-quarter 2024 earnings season. Investors also weighed the recent hawkish statement of the fed Chair regarding future rate cut. The S&P 500 and the Nasdaq Composite ended in positive territory while the Dow finished in negative zone.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) fell 0.1% to close at 43,389.60. At intraday high, the blue-chip index was down more than 148 points. The index posted three-consecutive days of decline. Notably, 15 components of the 30-stock index ended in negative territory while 15 in positive zone. 

The tech-heavy Nasdaq Composite finished at 18,791.81, rising 0.6% or 111.69 points due to strong performance by corporate giants. The tech-laden index terminated a four-day losing streak.

The S&P 500 was up 0.4% to finish at 5,893.62. 10 out of 11 broad sectors of the broad-market index ended in positive territory while one in negative zone. The Communication Services Select Sector SPDR (XLC), the Energy Select Sector SPDR (XLE), the Consumer Discretionary Select Sector SPDR (XLY), the Real Estate Select Sector SPDR (XLRE) and the Utilities Select Sector SPDR (XLU) advanced 1%, 1.3%, 0.9%, 0.9% and 0.9%, respectively. 

The fear-gauge CBOE Volatility Index (VIX) fell 4.5% to 15.58. A total of 14.94 billion shares were traded on Monday, higher than the last 20-session average of 14.12 billion. Advancers outnumbered decliners on the NYSE by a 1.71-to-1 ratio. On Nasdaq, the advance/decline ratio was 1- to -1. 

Tesla Spikes on News

The stock price of Tesla Inc. TSLA climbed 5.6% following Bloomberg report that President-elect Donald Trump’s transition team is planning to make ease U.S. government rules and regulations on self-driving cars. Tesla currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Last week, Trump selected Tesla CEO Elon Musk and former Republican presidential candidate Vivek Ramaswamy to lead the newly created Department of Government Efficiency. The main task of this department will be to end government “bureaucracy,” relax “excess” regulations and eliminate “wasteful” expenditures.

All Eyes This Week’s Earnings Reports

Wall Street is eagerly waiting for this week’s earnings reports, which will include several giant retailers, a key global leader and largest manufacturer of AI chips, a big medical device maker and a Internet-based behemoth.

Powell Cautions on Interest Rate Cut

On Nov 14, in his speech to business leaders in Dallas, the Fed Chairman Jerome Powell said that the central bank is in no hurry to cut the benchmark lending rate further. The Fed reduced the Fed fund rate by 75 basis points in two consecutive FOMC meetings in September and November. The Fed fund rate is currently in the range of 4.50-4.75% compared with a 23-year high of 5.25-5.5% in mid-September. 

Powell said, “The economy is not sending any signals that we need to be in a hurry to lower rates. The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.” Powell also said, “Domestic growth by far the best of any major economy in the world.”

Following Powell’s speech, the CME FedWatch interest rate derivative tool shows a 58.4% probability that the central bank will further reduce interest rate by another 25 basis points in December. This probability was 82.5% just before Powell’s statement. Market participants are still hopeful that the Fed will cut the lending rate by a full 1% in 2024.

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