U.S. stocks were mostly on an upswing as of midday Monday. The Dow Jones Industrial Average soared to intraday record highs as investors welcomed President-elect Donald Trump's choice of Scott Bessent as Treasury secretary. The benchmark S&P 500 edged just above flat, while the Nasdaq Composite slid into negative territory, weighed down by Nvidia (NVDA) losses.
The Dow added 0.6%, gaining about 250 points, supported by broad-based optimism. Meanwhile, the S&P 500 eked out a marginal gain of 0.1%, and the Nasdaq dropped 0.3%, reflecting weakness in major tech names. Markets began the holiday-shortened week on an upbeat note, building on last week’s rally, with traders closely watching economic data due later this week.
Market Movers:
- Nvidia (NVDA): Shares of the AI chip leader fell 3.7%, continuing losses from Friday despite strong quarterly results last week. Investors appear to be taking profits amid concerns about the company's lofty valuation, which has driven much of the Nasdaq's gains this year. Analysts also noted slowing demand growth in the AI sector as a contributing factor.
- Tesla (TSLA): The EV giant dropped 1.2% after reports surfaced of potential delays in Cybertruck deliveries due to supply chain constraints. The delays and uncertainty about Tesla's ability to meet year-end production targets weighed on sentiment despite broader market strength.
- MicroStrategy (MSTR): The stock slid 4.3% after the company disclosed a $5.4 billion purchase of 55,000 bitcoins at an average price of $97,862 per coin. While the acquisition shows MicroStrategy's confidence in Bitcoin, analysts raised concerns about the high price paid amid the cryptocurrency's volatile rally.
- Crude Oil (CL=F): Prices sank 2.9%, with West Texas Intermediate trading below $70 per barrel after reports of a potential ceasefire agreement between Israel and Lebanon. The de-escalation of tensions reduced geopolitical risk premiums, which had been supporting oil prices in recent weeks.
Small Caps Soar to Three-Year High
The Russell 2000, a benchmark for small-cap stocks, surged 1.6% on Monday, reaching its highest level since November 2021. The index has rallied over 20% year-to-date, with much of the gains coming since August as the Federal Reserve began cutting interest rates. Easing financing costs have helped bolster smaller companies, which are more sensitive to borrowing conditions, driving optimism among investors. The recent performance highlights renewed confidence in the economic resilience of domestic-focused businesses.
Economic Updates and Bitcoin's Surge
Investors are looking ahead to Wednesday's release of the Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation gauge. Expectations for a slight increase in core PCE are keeping rate speculation alive. Treasury yields eased, with the 10-year dipping below 4.3%, reflecting reduced fears of an aggressive rate hike trajectory.
Bitcoin (BTC-USD), which has rallied nearly 50% this month, briefly touched $95,000 before retreating slightly. Market sentiment remains bullish, with traders eyeing the psychological $100,000 milestone. MicroStrategy’s additional Bitcoin purchase underscores institutional confidence, though it also highlights risks tied to such concentrated bets.
Looking Ahead
Markets will be focused on economic data releases this week, particularly the PCE index, which could shape expectations for the Federal Reserve’s next moves. With Thanksgiving on Thursday and shortened trading hours on Friday, volumes may thin, potentially amplifying volatility. Investors will also monitor the broader implications of Trump’s Treasury pick, Scott Bessent, as well as ongoing developments in the tech sector and geopolitical landscapes. While the Dow's rally has spurred overall optimism, challenges in the Nasdaq suggest a nuanced market landscape heading into year-end.
