US Stocks Extend Year-End Rally, Nasdaq Flirts With Record Highs, Oil Rebounds: What's Driving Markets Monday?

As the week leading to Christmas kicks off, Wall Street has maintained the optimism prevalent since late October, with all major large-cap indices edging upward.

Investors continue to ignore warnings from Federal Reserve policymakers regarding the exceptional exuberance over their expectations for rate cuts in 2024. According to CME Group’s FedWatch tool, traders are factoring in six rate cuts for 2024, starting in March.

Cleveland Fed President Loretta J. Mester has indicated the market might be getting too ahead of itself regarding rate cuts, a sentiment echoed by New York Fed President John Williams Friday.

Chicago Fed President Austan Goolsbee, known for his dovish views, mentioned on CNBC Monday morning that the market may have misinterpreted the Federal Reserve’s message from last week.

The S&P 500 saw a 0.5% increase, mirrored by a similar gain in the tech-focused Nasdaq 100. The Dow Jones experienced a more modest rise of 0.2%, while small caps remained stable following a remarkable 6.6% surge last week. Treasury yields moved slightly higher, with the 10-year yield rising to 3.96%. The iShares 20+ Year Treasury Bond ETF TLT fell 0.9%.

The Nasdaq 100, as tracked by the Invesco QQQ Trust QQQ, is now only 0.4% far off its November 2021 record highs.

In the commodities market, oil prices climbed by 2%, with West Texas Intermediate (WTI) reaching $74.60 a barrel, later adjusting to $73.50. This increase follows attacks on vessels in the Red Sea by Yemen’s Houthi militant group, prompting major shipping companies like BP to halt oil and gas shipments from the region.

Monday Performance In Major US Indices, ETFs

Major Indices	Price	Percentage Change (%)
S&P 500	4,737.95	0.5%
Nasdaq 100	16,688.19	0.4%
Dow Jones	37,358.54	0.2%
Russell 2000	1,984.34	0.0%

The SPDR S&P 500 ETF Trust SPY was 0.6% higher to $472.17, the SPDR Dow Jones Industrial Average ETF DIA was 0.3% higher to $373.59 and the Invesco QQQ Trust QQQ rose 0.3% to $406.41, according to Benzinga Pro data.

Sector-wise, the Communication Services Select Sector SPDR Fund XLC outperformed, up 1.4%.

The Real Estate Select Sector SPDR Fund XLRE and the Utilities Select Sector SPDR Fund XLU are among the laggards, both falling 1.2%.

S&P Sector ETFs	Percentage Change (%)
Communications	1.4
Energy	0.5
Cons. Staples	0.4
Cons. Discretionary	0.3
Financials	0.1
Health Care	-0.1
Technology	-0.2
Materials	-0.4
Industrials	-0.4
Utilities	-1.2
Real Estate	-1.2

Stock Movers

• Shares of U.S. Steel Corp. X surged 27% on Monday following the announcement that the century-old steel manufacturer will be acquired by Japanese competitor Nippon Steel.
• Tech stocks extended their rally on bullish sentiment. Among the top daily performers, Meta Platforms Inc. META rose 3.4%, setting new all-time highs, and Alphabet Inc. GOOGL GOOG gained 3.4%.
• V.F. Corporation VF tumbled over 7% amid reports of the parent company of brands like The North Face, Timberland and Vans grappling with the aftermath of a cyberattack that has impacted its ability to fulfill orders. 
• SolarEdge Technologies Inc. SEDG fell 3.5% as Goldman Sachs downgraded the solar company from Neutral to Sell.

Read now: How High Can S&P 500 Go In 2024? Goldman Sachs Sets An Even Loftier Target

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