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The Dow Jones fell 250 points, continuing its underperformance to peers. The index has now declined in five out of the last six trading sessions. On the other hand, S&P 500 and Nasdaq retreated from their respective record high levels, declining 0.6% each.
Nvidia shares fell over 3% after China opened a probe over suspicions that the chipmaker and currently the most valuable company in the world, broke anti-monopoly laws around a deal it made in 2020.
Meantime, Chinese stocks that are listed in the US staged a sharp rally as top leaders in Beijing used their most direct language yet on providing monetary easing and boosting domestic consumption.
The Nasdaq Golden Dragon China Index, which tracks the biggest Chinese stocks in the US, climbed nearly 10%, its strongest intraday gain since late September. Large-cap technology stocks including Alibaba Group Holding Ltd. and PDD Holdings Inc. rose more than 7% each in New York trading.
Shares of Western companies with high revenue exposure in China also rallied. In the US, consumer names Estée Lauder Cos. and Amer Sports Inc. traded higher. In Europe, miners such as Rio Tinto Plc and luxury brands like LVMH led stock gains in the region’s equity benchmark.
Data including Wednesday’s consumer price index will offer Fed officials a final look at the pricing environment ahead of their meeting the following week. Any indication that progress has stalled on the inflation front could well undercut the chances of a third straight reduction in rates.
“This Wednesday’s inflation data may hold the key to the Fed’s next move,” said Jay Woods at Freedom Capital Markets. “So far results have been in line with economists’ expectations and haven’t scared the market. However, an upward surprise should raise eyebrows at the Fed and could put another rate cut on pause.”
Treasury 10-year yields rose four basis points to 4.20%. The Bloomberg Dollar Spot Index rose 0.1%.
Oil climbed as China signaled bolder stimulus for next year, with traders also keeping an eye on developments in the Middle East.
The S&P 500 will extend its record-setting rally to 7,100 by the end of next year amid a strong economy, according to Oppenheimer Asset Management, whose outlook is now the most bullish among peers.
Fundamentals “suggest the current resilience of the economy and the stock market appear poised to continue into next year,” the firm’s Chief Investment Strategist John Stoltzfus wrote in a note.
Citigroup Inc. strategists expect mid-single-digit gains for the S&P 500 in 2025 amid increasing volatility, fueled by a soft landing of the US economy, artificial intelligence and Donald Trump’s policy promises.
Their base-case target is 6,500 points for the S&P 500. The upper scenario is set at 6,900 and lower at 5,100; both the bull- and bear-case scenarios “frame an expectation for increased volatility,” the strategists wrote.
(With Inputs From Agencies.)
