Market Wrap | Nasdaq Surges on Quantum Leap as Fed Rate Speculation Fuels Volatility

On December 16th, US stock markets closed with mixed results. The S&P 500 rose 0.38% to 6074.08 points, while the Dow Jones Industrial Average fell by 0.25% to 43717.48 points. Meanwhile, the Nasdaq Composite saw a significant gain of 1.24%, ending at 20173.89 points.

This springboard in technology stocks is notably seen in Quantum Computing skyrocketing by 65.25%, with WISeKey and D-Wave Quantum also capturing traders' attention by soaring 53.06% and 44.30% respectively. Conversely, Larimar and Innate Pharma faced declines of 21.72% and 21.52%, respectively, while TuHURA Biosciences dropped 16.02%.

As the stock market anticipates the Federal Reserve's December policy meeting, volatility remains a concern among investors. Notably, the index's current performance echo mixed sentiments perhaps due to inflation rates and potential economic policy adjustments. The forthcoming meeting has fueled speculation of an expected rate cut by the Federal Reserve, likely trimming 25 basis points to a range of 4.25%-4.50%, staying influenced by heightened inflation rates rather than the central bank's previous assurances of quicker rate declines.

Economists foresee the latest Consumer Price Index (CPI) indicators could spur a modest increase in core PCE. We have witnessed a collective 0.31% increase for both comprehensive and core CPI figures in November, painting a picture of increasing economic resistance. Meanwhile, Producer Price Index (PPI) data revealed a 0.4% month-on-month ascendancy, led by tangible sectors, despite expectations anchored at 0.2% growth.

Market breadth concerns persist despite overall upward trends. Less than 50% of S&P 500-constituent companies have maintained stock prices above the 50-day moving average. Similarly, quantifiable stocks stay under their short-term trajectories. The tech-heavy surge, akin to Broadcom's AI-backed rally, outlines the lopsided stock movement marked by significant gains as seen recently with companies entering astronomical market cap brackets above one trillion dollars.

Such dynamics pry investor focus towards central bank policies shaping decision-making across key global markets including the US, Japan, and the UK. Expectations tilt towards dovish turns and policy inertia elsewhere in countries like Norway. Analysts highlight economic vigor sustained by conducive environments supporting financial sector advancement—emphasizing fiscal forecasts still allowing robust yields despite broader economic alerts rooting from slowing productivity and erstwhile hale inflation projection adjustments.