U.S. stocks experienced a modest decline on Monday, largely influenced by a significant rise in Treasury yields amid persistent economic challenges in the manufacturing sector. The market anxiously anticipates the Federal Reserve’s imminent policy announcement, following data showing that tariffs continue to impact U.S. manufacturing output.
The Institute for Supply Management reported that U.S. manufacturing contracted for the ninth consecutive month in November, as factories grappled with dwindling orders and rising prices due to ongoing tariff effects. Most investors are expecting a rate cut from the Federal Reserve at the upcoming two-day policy meeting scheduled for December 10, with the CME’s FedWatch Tool indicating an 85.4% probability of a 25 basis-point reduction.
Joe Saluzzi, a partner and co-head of Equity Trading at Themis Trading, noted the shift in market focus from earnings to the Fed’s policy trajectory, asserting that the uptrend may persist, albeit at a slower pace as the year concludes.
On the trading front, the Dow Jones Industrial Average fell by 427.09 points, or 0.90%, to settle at 47,289.33. The S&P 500 decreased by 36.46 points, or 0.53%, finishing at 6,812.63, while the Nasdaq Composite dropped 89.76 points, or 0.38%, to close at 23,275.92.
Despite caution from many policymakers, recent dovish signals from several key Federal Reserve members have sparked speculation about further monetary easing on the horizon. This sentiment is heightened by reports suggesting that White House economic adviser Kevin Hassett could be a frontrunner to succeed current Fed Chair Jerome Powell, who is expected to speak after market hours although he is not anticipated to address monetary policy directly due to the upcoming meeting.
Investors are also awaiting a delayed September report on the Personal Consumption Expenditures Price Index, which is the Fed’s preferred gauge of inflation, set to be released on Friday.
Higher U.S. Treasury yields, influenced by weakness in Japanese and European government bonds, weighed heavily on stock sectors such as real estate and utilities, typically considered safe havens in a rising interest rate environment.
In the crypto market, stocks linked to the sector fell sharply after Bitcoin’s price dipped nearly 6%, briefly dropping below the $85,000 mark. Coinbase’s shares fell by 4.8%, while U.S.-listed Bitfarms shares declined by 5.7%. Additionally, MicroStrategy, the largest holder of Bitcoin, experienced a 3.3% drop in its shares after revising its earnings forecast for 2025 due to a weak Bitcoin performance. Overall, the cryptocurrency market has shed over $1 trillion in value since peaking at around $4.3 trillion earlier this year.
On a brighter note, big-box retailers received a boost on Cyber Monday, with online shopping anticipated to generate $14.2 billion in spending, according to Adobe Analytics. Shares for Walmart and Target rose by 0.9% and 0.8%, respectively, contributing to a slight uptick in the S&P 500 retail index.
In a notable corporate development, Synopsys saw its shares surge by 4.9% after Nvidia announced a $2 billion investment in the semiconductor design software company.
Overall, declining stocks outnumbered advancing ones, with a 1.86-to-1 ratio on the New York Stock Exchange and a 2.33-to-1 ratio on the Nasdaq. The S&P 500 recorded 17 new 52-week highs and one new low, while the Nasdaq Composite noted 76 new highs and 78 new lows. Trading volume on U.S. exchanges reached 15.64 billion shares, below the 18.64 billion average for the last 20 trading sessions.
