New York Stocks Mixed Amid Caution Ahead of FOMC Meeting

All Eyes on Fed's Rate Decision on December 10
0.25 Percentage Point Cut Likely... Unprecedented Dissent Expected
Paramount Makes Hostile Bid for Warner Bros.; Both Stocks Jump 6%

On December 8 (local time), the three major indices of the New York Stock Exchange opened the session with mixed and mostly flat movements. Investors are taking a cautious, wait-and-see approach ahead of the U.S. Federal Reserve's policy rate decision scheduled for December 10.

A trader is working on the floor of the New York Stock Exchange (NYSE) in the United States. Photo by Reuters Yonhap News

As of 10:35 a.m. on the New York Stock Exchange, the Dow Jones Industrial Average, which focuses on blue-chip stocks, was down 87.19 points (0.18%) at 47,867.8 compared to the previous trading day. The S&P 500 Index, which tracks large-cap stocks, was down 9.84 points (0.14%) at 6,860.56, while the tech-heavy Nasdaq Index was up 3.783 points (0.02%) at 23,581.911.

By stock, Broadcom rose 2.66% after reports that Microsoft is discussing custom chip design with the company, attracting buying interest. Microsoft was also up 1.29%. Data infrastructure company Confluent surged 28.48% after news broke that IBM would acquire the company for $11 billion. Paramount and Skydance each rose 6% and 6.21% after Skydance made a hostile takeover offer for Warner Bros. Discovery. This move came immediately after President Donald Trump raised antitrust concerns over Netflix's attempt to acquire Warner Bros. Oracle was up 1.3% ahead of its quarterly earnings announcement scheduled for December 10.

This week, market attention is focused on the Federal Open Market Committee (FOMC) regular meeting of the Federal Reserve, which will be held on December 9 and 10. Given recent signs of a slowdown in employment, most expect the Fed to cut its benchmark interest rate, currently at 3.75-4.0% per year, by 0.25 percentage points. According to CME FedWatch, the interest rate futures market is pricing in an 87.4% probability that the Fed will cut rates by 0.25 percentage points at this meeting, while the probability of a rate hold stands at 12.6%.

This is linked to concerns about a slowdown in the U.S. labor market. According to private labor market research firm ADP, nonfarm payrolls in November decreased by 32,000 compared to the previous month. This figure is well below both the increase of 47,000 in October and the market forecast of a 5,000 increase.

However, with inflation still above the Fed's target of 2%, there are expected to be clear differences of opinion within the FOMC regarding the future path of interest rates. Even if rates are cut, there is a possibility that multiple members will dissent, and some expect that as many as five members could vote against the decision, which would be the first time since 1983.

Eric Friedman, Chief Investment Officer (CIO) at Northern Trust, commented, "The market is appropriately focused on whether the FOMC will cut or maintain rates after the meeting. However, what investors may be more interested in are the outlooks of the voting committee members and the future leadership of the Fed."

Despite expectations of a rate cut this month, U.S. Treasury yields are rising as uncertainty over the future path of rates remains. The 10-year U.S. Treasury yield, the global bond benchmark, rose 4 basis points (1bp = 0.01 percentage point) from the previous session to 4.18%. The 2-year U.S. Treasury yield, which is sensitive to monetary policy, also rose 4 basis points to 3.60%.