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U.S. stocks finished sharply lower on Monday, 17 December 2018 in a volatile session that saw the S&P 500 and Nasdaq post fresh year-to-date closing lows, extending the worst start to a December since 1980.

The Dow Jones Industrial Average retreated 507.53 points, or 2.1%, at 23,592.98, the S&P 500 fell 54.01 points, or 2.1%, at 2,545.94, and the Nasdaq Composite Index retreated 156.93 points to 6,753.73, a drop of 2.3%.

All 11 sectors ended in negative territory, with losses ranging from 1.0% (financials) to 3.7% (real estate).

Of particular interest is the Federal Reserve, which will conclude its final policy meeting of 2018 on Wednesday. Although the market is widely expecting a rate increase of a quarter of a percentage point.

On Monday, the ICE U.S. Dollar Index, a measure of the U.S. currency against a basket of six major rivals, was down 0.4% at 97.054. Market expectations for 2019 Fed rate increases, once put at three to four more increases, have also begun to lessen on the back of dovish comments from Fed officials, including Chairman Jerome Powell.

Economic data at Wall Street showed that the Empire Manufacturing Survey for December checked in at 10.9 for December (consensus 20.0), down from 23.3 in November, with a deceleration seen across almost every category. A number above 0.0 still connotes expansion, yet it is clear to see that activity decelerated in December; moreover, the report indicates that optimism about the six-month outlook was slightly more tempered than in November.

Separately, the NAHB Housing Market Index for December came in at 56 ( consensus 61), down from 60 in November. The drop reflects deteriorating confidence in housing market conditions, although it needs to be noted that the dividing line between optimism and pessimism is 50.0.

Traders are therefore also looking forward to speech by President Xi Jinping, to be delivered Tuesday morning in Beijing on the topic of economic reform, for any hints as to the trajectory of trade negotiations.

Bullion prices ended higher at Comex on Monday, 17 December 2018. Gold climbed on Monday, with declines in a leading dollar index, Treasury yields and the U.S. stock market, as well as comments from a well-known fund manager, prompting prices to settle at their highest in just over a week. The gains in gold come ahead of key central-bank policy decisions this week and uncertainty around concrete trade developments between the U.S. and China.

Gold for February delivery on Comex added $10.40, or 0.8%, to settle at $1,251.80 an ounce. March silver rose 0.8% to $14.759 an ounce, with prices settling around 0.4% lower for last week.

Oil futures declined on Monday, 17 December 2018 with U.S. prices below $50 a barrel and marking their lowest settlement in more than a year.The market failed to stabilize after a weekly loss, with prices suffering additional pressure from data that reportedly revealed a jump in crude stocks at the U.S. trading hub.

January West Texas Intermediate crude fell $1.32, or 2.6%, to settle at $49.88 a barrel on the New York Mercantile Exchange. That was the lowest finish for a front-month contract since Oct. 9, 2017.

On Monday, the ICE U.S. Dollar Index, a measure of the U.S. currency against a basket of six major rivals, was down 0.4% at 97.054. Gold is often sensitive to movements in the dollar. A weaker U.S. unit typically boosts demand for commodities priced in dollars as it makes them less expensive to users of other currencies.

Looking ahead, investors will receive Housing Starts and Building Permits for November on Tuesday.

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