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The Dow Jones Industrial Average fell back from the 48,000 handle on Monday as investor expectations for an upcoming interest rate cut from the Federal Reserve (Fed) were overridden by a fresh upswing in 10-year Treasury yields.

Rising Treasury yields batter investor sentiment

Stocks slipped on Monday as investors shifted their focus to the Federal Reserve’s December 10 meeting, where the central bank is widely expected to deliver a third straight interest rate cut. The S&P 500 (SP500) fell 0.5%, the Nasdaq dipped 0.4%, and the Dow lost 0.6%. Even with the strong expectations for another 25-basis-point cut, rising 10-year Treasury yields kept pressure on markets, reflecting investor uncertainty about inflation trends going into 2025. Futures markets now price in roughly a 90% chance of a rate cut, up sharply from a month ago.

Recent market gains, with multiple winning streaks across major indexes, suggest that investors have already “baked in” the likelihood of this cut. Analysts warn that if the Fed unexpectedly holds rates steady, stocks could fall quickly. Beyond the decision itself, attention is turning to what Fed Chair Jerome Powell will signal about the path ahead. With cooling labor data and Powell’s term running to 2026, analysts expect him to emphasize a cautious, data-dependent approach rather than offering clear clues about the pace of cuts next year.

AI tech rally continues to sputter along

Tech stocks were a bright spot in an otherwise muted session. Broadcom (AVGO) hit a record high on chip-development news with Microsoft (MSFT), while Confluent (CFLT) surged after IBM announced an $11 billion acquisition plan. Big movers elsewhere included Wave Life Sciences (WVE) and Structure Therapeutics (GPCR), both soaring on promising obesity-drug data, and Paramount Skydance (PSKY), which jumped amid a hostile bid for Warner Bros. Discovery (WBD). Berkshire Hathaway (BRK-B) also made headlines with a major leadership reshuffle as the company prepares for eventual post-Buffett transitions.

Dow Jones daily chart

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