U.S. stocks traded lower at midday on Monday, with investors cautious ahead of the Federal Reserve's policy meeting results. Paramount Global made an all-cash offer of $30 per share to acquire Warner Bros. Discovery, while IBM is in advanced talks to buy Confluent for $11 billion.
The Dow Jones Industrial Average fell 192.60 points, or 0.40%, to 47,762.39. The Nasdaq Composite dropped 59.20 points, or 0.25%, to 23,518.93, and the S&P 500 declined 26.36 points, or 0.38%, to 6,844.04.
Oracle shares rose as investors grew optimistic about its upcoming quarterly earnings report on Wednesday. Broadcom gained 3% following reports that Microsoft is discussing custom chip designs with the semiconductor manufacturer. IBM is negotiating a $11 billion acquisition of data-streaming firm Confluent to strengthen its AI and data infrastructure.
Last week, the S&P 500 rose about 0.3%, bringing it within 0.7% of its all-time high. Both the S&P 500 and Nasdaq posted four consecutive days of gains, while the Dow advanced in three of the past four sessions.
Friday's delayed release of the September core PCE index, which came in softer than economists expected, provided support for equities. This was among the last key economic data points before the Fed's policy meeting this week.
The Fed will begin its two-day meeting on Tuesday, with the decision due Wednesday. This marks the central bank's final meeting of the year, followed by Chair Jerome Powell's press conference.
Traders have increasingly priced in rate cuts at the upcoming FOMC meeting. CME's FedWatch Tool shows a 90% probability of a rate cut, up from less than 67% a month ago.
Eric Freedman, Chief Investment Officer at Northern Trust Wealth Management, noted, "The market is closely watching whether the FOMC will cut rates or hold steady. However, investors may focus more on members' rate projections and leadership dynamics."
Kevin Hassett, a leading candidate for next Fed chair, stated Monday that committing to six months of rate policy would be irresponsible, emphasizing data-dependent decision-making amid missing economic reports due to the government shutdown.
No major economic data was scheduled for Monday, but the New York Fed released its consumer expectations survey. Investors await earnings reports this week from companies including Lululemon, Costco, Broadcom, Oracle, and Adobe.
In M&A news, Paramount Global launched a hostile $30-per-share all-cash bid for Warner Bros. Discovery, just days after Warner Bros. struck a content deal with Netflix. Paramount argued its offer provides $18 billion more in cash value to shareholders than Netflix's deal and faces smoother regulatory approval. Warner Bros. Discovery owns CNN, TBS, HGTV, and HBO Max.
Comments