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By Stephen Culp
NEW YORK (Reuters) - Megacap tech shares muscled the S&P 500 and the Nasdaq to higher closes on Monday as U.S. Treasury yields paused and investors readied for a busy central bank week.
Bitcoin surged, touching a new high after U.S. President-elect Donald Trump suggested he plans to set up a bitcoin strategic reserve.
The FANG group of tech and tech-adjacent momentum stocks outperformed, gaining 2.7% on the day.
"We’re continuing to see an uneven melt up of stocks. The rotation into value seems to have fizzled out, at least for now," said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York.
"There’s a risk-on type of mentality at that point that translates into stocks in a broader sense, and it continues to feed the view that under a Trump administration, the investment environment is going to be favorable to tech and new world-type investments," Pursche added.
The Federal Open Market Committee (FOMC) is due to convene on Tuesday for its last monetary policy meeting of 2024, which is expected to conclude with a 25 basis point cut in the key Fed funds target rate.
Investors will scrutinize the Fed's Summary of Economic Projections (SEC) and its "dot plot," which maps out the central bank's future rate cut path, which has become less certain in light of recent data showing sticky inflation amid a relatively robust economy.
"I’ll be listening for any forward-looking statements that address whether the Fed believes after this next cut that they are in a restrictive mode and when they intend to get to neutral, what conditions would be required in order to get to neutral," Pursche said.
A report from S&P Global showed that U.S. business activity has accelerated its expansion this month, despite ongoing weakness in the manufacturing sector.
Among central bank actions elsewhere, Sweden's Riksbank is also expected to cut interest rates, while policymakers in Japan, Britain and Norway are seen holding steady.
Soft retail sales data from China underscored the need for more aggressive stimulus from Beijing.
The Dow Jones Industrial Average fell 110.21 points, or 0.25%, to 43,717.85, the S&P 500 rose 23.03 points, or 0.38%, to 6,074.12 and the Nasdaq Composite was up 247.17 points, or 1.24%, to 20,173.89.
European shares closed lower, weighed down by heavyweight luxury goods and energy shares in the wake of China's downbeat retail sales report.
French stocks weighed on European markets after Moody's unexpectedly downgraded the country's rating on Friday.