The S&P 500 slipped on Monday as investors paused ahead of the Federal Reserve’s final policy decision of the year. US equities eased back after a strong two-week stretch, with confidence already high that policymakers will deliver another interest-rate cut this week. While easing expectations have supported recent gains, the continued rise in Treasury yields has added a layer of caution, with investors weighing how inflation pressures and next year’s outlook could influence the pace of further policy moves. Tech shares provided some support, helped by strong corporate news in semiconductors and software, but broader sentiment remained restrained as traders positioned for Wednesday’s announcement.

Key Takeaways:

  • S&P 500 Pulls Back Ahead of Fed Decision: The S&P 500 slipped 0.35% to 6,846.51 as traders paused following two straight weekly gains. Softer-than-expected US core PCE data late last week reinforced expectations for another quarter-point rate cut on Wednesday, but the continued rise in Treasury yields kept sentiment cautious.
  • Nasdaq Retreats After Four-Day Rally: The Nasdaq Composite dipped 0.14% to 23,545.90 after a strong streak driven by tech strength. Investors remain confident in another cut but are balancing optimism against lingering inflation uncertainty and the implications for next year’s policy outlook.
  • Dow Slips as Momentum Cools: The Dow Jones Industrial Average declined 0.45% to 47,739.32, easing back after three gains in four sessions. The recent positive tone has been supported by growing confidence in monetary easing, though Monday’s session reflected a more measured stance ahead of key guidance.
  • Europe Markets Slightly Lower Ahead of Fed and Data Signals: European equities traded cautiously, with the Stoxx 600 down 0.07% as investors focused on US policy risk. The FTSE 100 fell 0.23% to 9,645.09, extending its weaker run as UK economic updates continued to show mixed momentum. France’s CAC 40 slipped 0.1% to 8,108, while Italy’s FTSE MIB closed flat at 43,432. Germany’s DAX edged up 0.07% and Switzerland’s SMI rose 0.35% as local earnings and defensive sectors provided limited support. Labour market data from the UK showed starting salaries rising at the fastest pace in five months despite slowing hiring, underscoring persistent wage pressures that complicate inflation progress. Eurozone investor sentiment improved into December but remained in contraction territory, pointing to ongoing stagnation. Meanwhile, stronger-than-expected German industrial output rising 1.8% in October signalled that manufacturing activity may be stabilising after a prolonged downturn.
  • Asia-Pacific Mixed as Investors Parse China Trade Strength: The region saw varied performance as fresh Chinese trade figures indicated resilience abroad but ongoing weakness domestically. The Hang Seng fell 1.12% amid concern over China’s property slump and consumer slowdown, while the CSI 300 gained 0.81% after exports surged 5.9% year-on-year and the trade surplus exceeded $1 trillion for the first time. Japan’s Nikkei rose 0.18% and the Topix climbed 0.65%, helped by exporters despite GDP being revised to a sharper 2.3% annualised contraction. South Korea’s Kospi advanced 1.34% on strength in technology names, while India’s Nifty 50 dropped 0.65% after the aviation regulator warned IndiGo over mass flight cancellations, pushing the carrier’s shares more than 5% lower. Australia’s ASX 200 slipped 0.12% as traders awaited the Reserve Bank of Australia meeting, with economists expecting rates to remain unchanged at 3.60% and stay on hold through 2026.
  • Oil Falls as Ukraine Discussions Continue: Brent dropped 1.98% to $62.49 and WTI declined 2% to $58.88, with diplomatic efforts around the conflict in Ukraine raising prospects of higher Russian supply, even as G7 and EU officials weigh stricter maritime controls on exports.
  • Treasury Yields Tick Higher Before Fed Meeting: The 10-year yield rose to 4.168% and the 30-year to 4.811%, reflecting ongoing caution as the Fed prepares to deliver its final decision of the year. Fed funds futures now imply an 89% chance of a 25-bp cut, sharply higher than a month ago.

FX Today:

  • EUR/USD Eases After Resistance Test: EUR/USD slipped 0.05% to close at 1.1638 after reaching a high of 1.1672 and a low of 1.1616. The pair lost momentum near the upper end of its recent range, forming a small bearish candle with an upper wick that reflected fading buying pressure. Price remains above the 50-day SMA at 1.1608, while trading just below the 100-day SMA at 1.1644, leaving the short-term tone slightly cautious. The broader trend is still supported by the upward-sloping 200-day SMA at 1.1468, but the failure to hold gains near 1.1670 highlights persistent resistance. A reclaim of 1.1644 would help restore bullish momentum, while a drop below 1.1608 could expose 1.1550.
  • GBP/USD Holds Steady Within Key Moving Average Cluster: GBP/USD ended marginally lower at 1.3325 after trading between 1.3347 and 1.3306, with a small-bodied candle showing indecision as the pair pauses its recent rebound. Price is caught between conflicting moving averages, sitting above the 50-day SMA at 1.3264 but below both the 200-day SMA at 1.3332 and the 100-day SMA at 1.3366. The recovery from late-November lows has slowed as sellers remain active near overhead levels. A move through 1.3366 would strengthen the near-term outlook toward 1.3400, while a drop back under 1.3306 would increase pressure toward 1.3264.
  • USD/CAD Attempts Recovery After Steep Slide: USD/CAD climbed 0.31% to 1.3857 after swinging between 1.3860 and 1.3799, forming a hammer-style candle that suggests buyers stepped in near the lows. The pair continues to trade beneath all major SMAs, with the 50-day at 1.4006 and the 100-day and 200-day clustered around 1.3901–1.3907, marking a strong resistance zone after November’s breakdown and adding pressure to the downside bias. Retaining support at 1.3799 is key to further stability, while a sustained push back above 1.3907 would be needed to ease bearish momentum.
  • USD/CHF Pushes Toward Range Highs: USD/CHF rose 0.34% to 0.8069 after a session high of 0.8085 and a low of 0.8028, closing near the top of its daily range. Price action has reclaimed the 50-day SMA at 0.8004 and the 100-day SMA at 0.8007, signalling improving short-term sentiment even as the 200-day SMA at 0.8166 remains a longer-term ceiling. The pair is pressing against a familiar resistance band around 0.8085–0.8100 that has capped upside attempts for two months. Holding above 0.8028 keeps the bullish tone intact, though failure at the range top risks another retreat into consolidation.
  • USD/JPY Resumes Upswing Toward Recent Highs: USD/JPY advanced 0.39% to 155.94 after reaching 155.98 and dipping to 154.90, with a strong green candle reinforcing the broader uptrend. Price remains well supported by the rising 50-day SMA at 153.35 and wider separation from the 100-day (150.55) and 200-day (148.14), signalling strong bullish control. The pair is approaching resistance near 155.98 and the prior swing high around 157.50. Staying above 154.90 keeps buyers firmly in charge, while any pullback beneath that level could allow a deeper test toward 153.35.
  • Gold Pauses After Strong Run Higher: Gold slipped 0.11% to $4193, trading between $4219 and $4176 as consolidation continued near elevated levels. Price holds comfortably above the 50-day SMA at $4076, alongside a firmly rising 100-day at $3775 and 200-day at $3493, confirming bullish conditions across all timeframes. Recent tightening in the range suggests buyers are protecting positioning after early-December highs. Resistance sits at $4219 and then $4350, while $4176 and the $4100 region offer key support if the current pause extends.

Market Movers:

  • Paramount Skydance and Warner Bros Discovery Climb on Takeover Bid: Paramount Skydance rose more than 9% after launching a hostile takeover offer for Warner Bros Discovery, while WBD gained over 4% as the $30-per-share proposal topped Netflix’s earlier bid and fuelled speculation of industry consolidation.
  • Air Products and Chemicals Slides on Project Partnership Update: The stock fell over 9% to lead S&P 500 decliners after announcing it will partner with Yara International on long-term ammonia projects in the US and Saudi Arabia.
  • Marvell Technology Drops After Analyst Downgrade: Shares declined more than 6% to the bottom of the Nasdaq 100 after Benchmark cut its rating to hold from buy.
  • Tesla Declines as Morgan Stanley Cuts Rating: Shares retreated more than 3% after being downgraded to equal weight amid concerns over valuation and delivery momentum.
  • Kymera Therapeutics Surges on Trial Results: Shares jumped more than 41% after positive data from its Phase 1b trial of KT-621 in moderate to severe atopic dermatitis.
  • Confluent Soars as IBM Agrees Acquisition: The stock rallied more than 29% after IBM announced an $11 billion deal valuing Confluent at about $31 per share.
  • Carvana Leaps on Index Inclusion: Shares climbed more than 12% after S&P and Dow Jones Indices said Carvana will enter the S&P 500 later this month.

With the final Fed decision of the year now just days away, global markets are stepping back to reassess positioning. Optimism over policy easing has been priced in over recent sessions, leaving investors looking for confirmation that rate cuts can continue in 2025 without jeopardising progress on inflation. Equity momentum remains broadly intact, but the market’s next direction will depend on how the Fed frames the path ahead and whether Wednesday brings reassurance or fresh uncertainty.