U.S. stocks ended mixed on Monday, Sept. 16, as investors awaited the Federal Reserve’s rate decision on Sept. 18.
The Dow Jones Industrial Average climbed 0.6%, reaching a new all-time high with a year-to-date return of 10.4%.
Similarly, the S&P 500 also hit a record high, boasting a year-to-date return of 18.8%. In contrast, the Nasdaq composite closed 0.5% lower. Meanwhile, 10-year Treasury yields fell by 3.4 basis points, contributing to a year-to-date decline of 31.7 basis points.
On Tuesday, stock prices remained mostly unchanged as investors awaited the Fed rate cut. Both the S&P 500 and the Dow ended stagnant, while the Nasdaq gained 0.2%.
Trading in Fed funds futures surged, reflecting heightened speculation about the Fed’s next move, with markets pricing in a 60% chance of a 50-basis point cut. European markets anticipated a 35% probability of a second rate cut by the Bank of England.
Wednesday saw the 50 basis point cut by the Fed—the first since March 2020—which lowered the federal funds rate to a range of 4.75% to 5%.
Unexpectedly, the markets closed slightly lower as investors processed the decision. The Fed’s move reinforced expectations of future cuts, with markets pricing in additional cuts by the end of 2024.
The S&P 500, the Dow, and the Nasdaq dropped 0.3%, 0.2%, and 0.3%, respectively, while 10-Year Treasury Yields recorded their steepest curve since July 2022, rising to 3.71%.
On Thursday, stocks rallied on optimism from the rate cut decision, pushing the S&P 500 and the Dow to new all-time highs. The S&P 500 jumped 1.7%, bringing its year-to-date gain to roughly 20%.
Similarly, the Dow and the Nasdaq rose 1.3% and 2.5%, with year-to-date gains of 11.4% and 22%, respectively. By this time, traders started factoring in a 70% likelihood of another Fed rate cut by the end of the year.
On Friday, U.S. markets saw a slight pullback following Thursday’s rally. The S&P 500 and the Dow retreated slightly after reaching record highs the previous day, with the S&P 500 down around 0.2%, led by declines in the energy and industrial sectors.
Tech stocks, which had surged earlier, also cooled, with the Nasdaq down about 0.4% as semiconductor stocks like Onsemi and ASML Holding suffered losses.
From Monday’s mixed outcomes to Friday’s pullback, stocks fluctuated as markets processed the Fed’s 50 basis point cut. Despite record highs midweek, uncertainty around further cuts remains. Investors must remain vigilant and continue to monitor macroeconomic factors as they plan their next moves.
