Wall Street Stumbles Ahead of a Crucial Rates Week
Investor sentiment remains broadly positive, supported by rising expectations of a quarter-point rate cut in two weeks.
Quick overview
- Wall Street's major indexes closed lower on December 1, with the Dow dropping 0.9% and the S&P 500 and Nasdaq both falling 0.4%.
- Investor sentiment remains positive ahead of the Federal Reserve's expected interest rate cut, with an 88% probability of a quarter-point reduction.
- Markets are also focused on potential nominees for the next Fed chair, with Kevin Hassett reportedly the leading contender.
- Stocks to watch include Strategy Inc., which fell 3.2% after cutting guidance, and Ascent Industries Co., which rose 6.7% following a new commercial program announcement.
Although a December rate cut is widely expected, the real uncertainty lies in what comes next. Against that backdrop, all three major benchmarks closed lower on Monday.
Wall Street’s main indexes fell on Monday, December 1, after a cautious trading session that opened the final month of the year—just days before the Federal Reserve is expected to deliver another interest-rate cut.
The Dow Jones Industrial Average dropped 0.9% to 47,289.36 points. The S&P 500 slipped 0.4% to 6,820.71, while the Nasdaq Composite also fell 0.4% to 23,275.92.
Last week—shortened by the Thanksgiving holiday—all three benchmarks gained more than 3%. The S&P 500 and the Dow also closed November in positive territory, while the Nasdaq ended the month down 1.5%, reflecting renewed concerns over stretched tech valuations and the rapid pace of AI-related spending.
Fed rate-cut decision approaches
Investor sentiment remains broadly positive, supported by rising expectations of a quarter-point rate cut at the Fed’s December 9–10 meeting.
The probability of a cut has surged to around 88%, up from roughly 45% just over a week ago. Dovish signals from Fed officials—hinting that economic conditions may warrant a reduction—have helped fuel those expectations, though uncertainty lingers due to the limited flow of new data following the recent federal government shutdown.
This week will bring a wave of U.S. economic releases, including manufacturing and services activity, consumer confidence, and private payrolls. Major retail names will also be in focus after last week’s Black Friday data showed a rise in online spending.
Fed chair succession in the spotlight
Markets are also weighing comments from President Donald Trump, who said he has already decided whom he will nominate as the next chair of the Federal Reserve, though he declined to disclose a name.
Recent reports suggest the shortlist includes White House economic adviser Kevin Hassett, former Fed governor Kevin Warsh, and current Fed governor Christopher Waller. Hassett is reportedly the leading contender, though he downplayed speculation, saying only that he would be “delighted to serve.”
Stocks to watch
- Strategy Inc. tumbled 3.2% after cutting guidance and selling shares to build a $1.44 billion cash buffer—an attempt to ease concerns that the Bitcoin treasury manager may be forced to sell part of its massive crypto holdings, valued at $56 billion.
- Shares of Ascent Industries Co. jumped 6.7% after the company announced it had secured a new commercial program expected to generate more than $10 million in incremental annualized revenue.
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