U.S. major stock indices ended lower on Monday as investors adopted a cautious stance ahead of the Federal Reserve's two-day policy meeting starting Tuesday, widely expected to conclude with a quarter-percentage rate cut.
The Dow Jones Industrial Average declined 215.67 points, or 0.45 percent, to 47,739.32. The S&P 500 dropped 23.89 points, or 0.35 percent, to 6,846.51. The Nasdaq Composite Index fell 32.22 points, or 0.14 percent, to 23,545.9.
Sector performance was broadly negative, with ten of the 11 primary S&P 500 sectors closing lower. Communication services and materials were the primary underperformers, falling 1.77 percent and 1.66 percent, respectively. The technology sector stood out as the lone gainer, advancing 0.93 percent.
Market participants remain highly confident in a rate reduction at Wednesday's policy announcement, with the CME FedWatch Tool indicating an 88 percent probability of a 25-basis-point cut, up from 67 percent a month earlier.
"The market action you've seen the last one or two weeks is kind of essentially baking in the very high likelihood of a 25 basis point cut," said Stephen Kolano, chief investment officer at Integrated Partners. "For some very unlikely reason, if they don't cut, forget it. I think markets are down 2 percent to 3 percent."
A slight uptick in the 10-year U.S. Treasury yield to approximately 4.17 percent from Friday's close of 4.14 percent contributed to pressure on equity valuations, as higher yields can make bonds more attractive relative to stocks.
In corporate news, Nvidia shares rose 1.72 percent amid reports that the Trump administration is preparing to approve sales of the company's advanced H200 artificial intelligence chips to China. Additionally, shares of Carvana and CRH surged following confirmation that they will join the S&P 500 index.
The media sector saw significant developments as Warner Bros. Discovery shares surged on news that Paramount launched a 108-billion-U.S.-dollar hostile takeover bid for the entire company, potentially disrupting Netflix's previously announced agreement to acquire Warner Bros. Discovery's studios and streaming operations. Netflix shares declined more than 3 percent in response.
U.S. stocks fall amid caution ahead of Fed decision
