Wall Street Retreats as Fed Decision Looms, Manufacturing Data Disappoints
U.S. stocks experienced a pullback on Monday, December 2nd, 2025, as rising Treasury yields and concerning manufacturing data tempered investor enthusiasm ahead of next week’s Federal Reserve meeting. The Dow Jones Industrial Average registered the steepest decline, signaling a broader shift toward caution among market participants.
The downturn reflects growing investor sensitivity to economic indicators and anticipation of the Fed’s monetary policy announcement on December 10th. A weakening manufacturing sector, coupled with the potential for continued high interest rates, has prompted a reassessment of recent market gains. This impacts retirement accounts, investment portfolios, and overall economic confidence as the year draws to a close.
The Dow Jones Industrial Average closed down 0.90%, shedding 427.09 points to reach 47,289.33. The Standard & Poor’s 500 index also declined, falling 0.53% or 36.46 points to 6,812.63. Technology-focused Nasdaq Composite experienced a more moderate decrease, dropping 89.76 points, or 0.38%, to 23,275.922.
Contributing to the negative sentiment, the Institute for Supply management’s (ISM) report revealed that U.S. manufacturing activity contracted for the ninth consecutive month in November. The report cited weak order volumes and increased costs stemming from tariffs as key factors hindering factory output.
Market consensus currently anticipates a 25 basis point rate cut following the fed’s two-day meeting. CME’s FedWatch tool estimates the probability of such a reduction at 87.4%.
“The market is obviously still earnings driven, we’ve been through the reporting season, but now it’s the Fed,” stated Joe Saluzzi, partner, co-founder and head of equity market structure research and co-head of equity trading at Themis Trading in Chatham, New Jersey.
Despite cautious commentary from some Federal Reserve officials, recent signals from voting members suggesting a more dovish stance, alongside speculation regarding potential leadership changes-specifically, reports mentioning Kevin hassett as a possible successor to Jerome Powell (though no public confirmation exists)-have bolstered expectations for future monetary easing.
jerome Powell is scheduled to deliver remarks following market close, though, he is not expected to address monetary policy specifics due to the proximity of the upcoming Fed meeting.
