Wall Street flat ahead of Fed meeting

The trading session on December 4 (early morning of December 5, Vietnam time) on Wall Street ended in a sluggish but tentative state, with major indexes fluctuating slightly in the context of investors waiting for a series of important economic data and the Federal Reserve's interest rate policy decision next week. The prevailing caution kept the market moving sideways, but still maintained near all-time highs, reflecting relatively positive expectations about the upcoming monetary cycle.

Investors “hold their breath” waiting for the Fed to decide on interest rates

At the close, the S&P 500 rose 0.1% to 6,857.12 points, just 0.5% away from its all-time high. The Dow Jones fell slightly by 0.1%, losing 31.96 points to 47,850.94 points, while the Nasdaq rose 0.2% to 23,505.14 points. Notably, the Russell 2000, representing the small-cap group, rose 0.8% to 2,531.16 points, showing that investors' risk appetite is starting to recover.

Markets were generally calm after weeks of wild swings, but the focus remained on the outlook for interest rates and a slew of earnings reports from retail, technology and consumer goods companies.

Among the gainers, Dollar General was a bright spot, jumping 14% after reporting earnings that beat expectations. The company said increased traffic and improved margins helped its latest financial picture to be better than expected. Hormel Foods also rose 3.8% on better-than-expected results, helped by strong demand for brands like Planters and Jennie-O. The company also gave a more positive outlook for next year than analysts had estimated.

Tech stocks also helped lift the market. Salesforce rose 3.7%, despite some swings in the session. The business software company's latest quarterly profit beat estimates, though revenue fell slightly. CEO Marc Benioff said Salesforce is "uniquely positioned in the AI ​​era," warning that the world may be overinvesting in artificial intelligence, a topic increasingly debated on Wall Street.

Kroger, on the other hand, fell 4.6% after its quarterly revenue missed expectations, despite a profit that topped forecasts. The company also revised down its full-year revenue expectations, leaving investors worried about U.S. consumer demand. Snowflake plunged 11.4%, despite continuing to beat earnings and revenue expectations. Analysts attributed the sharp decline to disappointment due to high expectations after previous strong results, while product revenue growth slowed.

In the bond market, the yield on the 10-year US Treasury rose to 4.10% from 4.06%. Although the increase is small, the upward trend in yields could still limit the flow of money into stocks, especially as investors reconsider the possibility of a Fed rate cut.

Economic data released today weighed on expectations for monetary policy. The number of applications for unemployment benefits fell to its lowest level in more than three years last week, reflecting signs of a more stable labor market than expected. Another report showed layoffs fell by more than half in November from the previous month, though they were still higher than a year earlier.

The positive signs from the labor market have a double whammy: they ease recession fears, but they may also make the Fed more cautious about easing policy. Markets still expect the Fed to cut interest rates for the third time this year next week, but the certainty has diminished slightly.

According to experts, the market is in a state of “pause” before the policy turn. The PCE inflation report, the Fed’s preferred inflation measure, is expected to be released just before the December 10 meeting and could have a big impact on the interest rate decision. If the PCE “cools” sharply, the expectation of interest rate cuts will increase rapidly, supporting the technology group and growth stocks to break out at the end of the year. Conversely, if the data is not convincing enough or the market has priced in too much optimism, a slight correction is entirely possible.

For small-caps, the Russell 2000’s rally suggests investors are looking for opportunities in cyclical stocks, which stand to benefit most from falling interest rates but are also most vulnerable to economic weakness.

The December 4 session was therefore marked by caution and observation. There were no more strong fluctuations, the market remained near the top thanks to policy expectations, but still faced many risks from economic data. Although there was no big move, the session laid the foundation for a period of stronger volatility, with the possibility of a breakout or correction depending largely on the Fed's decision next week.

Source: https://thoibaonganhang.vn/pho-wall-di-ngang-truoc-them-cuoc-hop-fed-174663.html