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MicroStrategy ( MSTR ) rises on Nasdaq 100 inclusion

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Crypto stocks rally

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Honeywell ( HON ) explores separation of aerospace business

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Indexes: Dow off 0.04%, S&P 500 up 0.51%, Nasdaq up 1.23%

(Updates to midafternoon trading, adds analyst comment, market

details)

By Chuck Mikolajczak

NEW YORK, Dec 16 (Reuters) - The Nasdaq hit a record

high on Monday and the S&P 500 also rose as investors assessed

the latest economic data while awaiting the Federal Reserve's

final policy announcement of the year later in the week to gauge

the path of interest rates.

Markets have almost completely priced in a rate cut at the

conclusion of the Fed's two-day policy meeting on Wednesday,

with a 99.1% chance for a cut of 25 basis points (bps),

according to CME's FedWatch Tool.

"Maybe the market was a bit oversold last week and with

almost a 100% likelihood that the Fed will cut on Wednesday, the

only outstanding question is what kind of rhetoric, what kind of

notes will investors get regarding guidance," said Sam Stovall,

chief investment strategist of CFRA Research in New York.

"It is likely to be a hawkish cut, meaning they will cut

rates but the Fed will be talking about how they are still

data-dependent and as a result there could be fewer cuts next

year than people are thinking."

On the economic front, S&P Global said its flash

manufacturing PMI dropped to 48.3 this month, below the 49.8

reading of economists polled by Reuters and the 49.7 in

November. In addition, a gauge of factory production hits its

lowest level since May 2020 ahead of the prospect of higher

tariffs increasing the cost of imported raw materials next year.

The Dow Jones Industrial Average fell 17.44 points,

or 0.04%, to 43,810.62, the S&P 500 gained 30.77 points,

or 0.51%, to 6,081.86 and the Nasdaq Composite gained

244.30 points, or 1.23%, to 20,171.03.

The S&P 500 snapped a three-week streak of gains last week

and the Dow also fell, while the Nasdaq managed a fourth

straight week of gains.

Most megacap and growth stocks traded higher, with Google

parent Alphabet up more than 4% and Tesla up

5.2% to help lift the communication services and

consumer discretionary sectors. Wedbush Securities

raised its price target on Tesla to a Wall Street high of $515.

Both the Nasdaq 100 and the Nasdaq Composite touched

record highs, while the small-cap Russell 2000 jumped

0.9%.

Ahead of the Fed decision, retail sales data will be eyed on

Tuesday for signs of continued strength in the consumer.

The S&P 500 is up 27.5% this year as optimism over growth in

artificial intelligence-related companies, the start of the

Fed's rate-cutting cycle, a resilient economy and expected

pro-business policies from Donald Trump's incoming

administration have helped boost equities. The benchmark index

is up more than 58% over the past two years, which would mark

its strongest two-year period since a 65.9% surge in 1997 and

1998.

Honeywell International ( HON ) climbed 4.4% after the

industrial conglomerate said it was exploring a separation of

its aerospace business.

Cryptocurrency stocks rose as bitcoin jumped above

$106,000, continuing its rally since the U.S. presidential

election on expectations the new administration will benefit

cryptocurrencies, and bitcoin buyer MicroStrategy ( MSTR ) was set to

join the Nasdaq 100 index.

MicroStrategy ( MSTR ) advanced 3.2%, while bitcoin miner

MARA Holdings ( MARA ) shot up 8.8%. Super Micro Computer ( SMCI )

, among those stocks set to be removed from the Nasdaq

100, tumbled 8%.

Advancing issues outnumbered decliners by a 1.02-to-1 ratio

on the NYSE and a 1.22-to-1 ratio on the Nasdaq.

The S&P 500 posted 14 new 52-week highs and 15 new lows,

while the Nasdaq Composite recorded 96 new highs and 160 new

lows.