Nasdaq Up Again, Makes New All-Time High, All Eyes On Wednesday's FOMC Announcement Stocks closed mixed yesterday, but the Nasdaq led the gainers with 1.24%, followed by the small-cap Russell 2000 with 0.64%, and the S&P 500 with 0.38%. Interestingly, the Dow was down again yesterday for the eighth day in a row. Plenty of big names charging higher yesterday, including chip maker Broadcom, which soared 11.2% (which was on top of Friday's 24.4%). And most of the Magnificent 7 were higher as well, including Tesla, which gained 6.14%, and Alphabet with 3.60%. But Nvidia did not join in, shedding -1.68%. With last week's CPI and PPI inflation reports behind us (they showed progress on inflation stalling at best, and ticking slightly higher at worst), the market will turn its attention to Wednesday's FOMC Announcement where the Fed is widely expected to cut rates by another 25 basis points. Even though the inflation reports could have been better, Fed Funds traders still have a 95.4% likelihood that the Fed will cut again on Wednesday. Of course, nothing is a done deal until it's done. But the main focus on Wednesday will be on what the Fed's forecast is for next year. Last they shared, they expected rates to fall to 4.4% by year's end (which suggests another 25 bps cut this week), and then falling to 3.4% next year, meaning another 100 bps worth of cuts in 2025. But the latter is looking less clear. And each worse-than-expected inflation report, and each better-than-expected employment report, creates more uncertainty around the trajectory of future cuts. On Friday, two days after the Fed announcement on rates, we'll get another look at inflation with the Personal Consumption Expenditures (PCE) index (which is the Fed's preferred inflation gauge). But then we'll have to wait 2 more weeks until we get the next Employment Situation report on Friday, January 3rd. Both of those reports are important because they speak to Fed Chair Jerome Powell's comments when he said he was "feeling good" about the economy, and that they've made "significant progress on inflation," while maintaining a "strong, but not overheated" jobs market. If those upcoming reports can underscore Mr. Powell's sentiments, that will go a long way in helping to remove some of the doubt that has crept into next year's rate expectations. In other news, yesterday's Empire State Manufacturing Index came in at 0.2 vs. last month's 31.2 and views for 9.1. And the PMI Composite report showed the Composite Index at 56.6 vs. last month's 54.9 and estimates for 54.6. The Manufacturing Index was at 48.3 vs. last month's 49.7 and the consensus for 49.6. And the Services Index was at 58.5 vs. last month's 56.1 and expectations for 55.9. Today we'll get Retail Sales, Industrial Production, Business Inventories, and the Housing Market Index. The 2-day FOMC meeting starts today as well, but we won't hear any decisions until tomorrow at 2:00 PM ET, followed by the Fed Chair Press Conference at 2:30. There's a lot of week left to go, but the Nasdaq is off to a great start. If they can keep that going for the rest of the week, that would make it 5 up weeks in a row. The S&P and Russell 2000 are off to a fine start as well. They don't have a streak to extend as theirs ended last week and the week before. But they could very well start a new one. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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