US stocks fell on Monday as Wall Street entered a shortened holiday trading week.
Stock and bond markets will be closed for Thanksgiving on Thursday and end at 1 p.m. ET on Friday.
The S&P 500 (^GSPC) fell 0.4%, while the Dow Jones Industrial Average (^DJI) slipped about 45 points, or 0.1%. The tech-heavy Nasdaq Composite (^IXIC) fell 1.1%.
Investors valued Fedspeak higher in the final hour of Monday’s session. San Francisco Federal Reserve Chair Mary Daly said officials could raise the U.S. central bank’s key rate above 5% if inflation does not ease. Daly also noted that the reversal of a 75 basis point hike in December is “premature” and that “nothing is on the table.”
“I tend to be on the more hawkish side of the cast,” Daly said on a conference call, referring to the range of his colleagues from the most aggressive to the politically tough at least.
Oil extended losses following reports that Saudi Arabia and other OPEC nations are discussing increased production. A spate of COVID-related deaths in China has also resurfaced amid fears the country may put new restrictions in place to mitigate recent outbreaks. Both events raised demand concerns, with West Texas Intermediate (WTI) crude futures falling below $80 a barrel.
The US dollar has appreciated against other currencies due to concerns over the image of COVID in China.
Bitcoin (BTC-USD) slipped 4% below $16,000 and Ethereum (ETH-USD) fell 6% to just below $1,100 as the impact of the collapse of the FTX cryptocurrency exchange continuing to permeate the crypto markets.
Meanwhile, shares of Disney (DIS) soared 6% despite a down day in other market sectors after the media giant announced on Sunday evening that former chief executive Bob Iger would return to the helm. of the company as CEO, effective immediately.
Monday’s moves come after a lackluster week on Wall Street, with sentiment weighed down by renewed concerns over rising interest rates. The benchmark S&P 500 was down about 0.7% for the period and the Nasdaq 1.6%, while the Dow Jones was roughly flat.
Historically, Thanksgiving week has tended to be bullish. Over the past half-century, the S&P 500 has gained an average of 0.5% during the holiday week and has returned positive 68% of the time, according to data from Schaeffer’s Investment Research. The Wednesday before Thanksgiving was positive 78% of the time with an average gain of 0.3%, while the next day was 66% of the time with an average increase of 0.2%.
“The stock market’s ‘lower inflation’ rally lost some momentum last week, but bulls hoping for the rally to get back on track could look at historical trading patterns around Thanksgiving,” Chris Larkin, managing director of trading at Morgan Stanley’s E*COMMERCE said in a note. “While people take time off around Thanksgiving, the stock market isn’t so inclined: Even amid a shortened trading week, the SPX since 1950 has moved almost as much during Thanksgiving week as during its period. five-day average trading time.”
Investors are in for a few quiet days. Minutes from the Federal Reserve’s November rate-setting meeting, scheduled for Wednesday, are the culmination of a light economic calendar this week. On the corporate side, a few additional earnings are expected to be released, including Dell Technologies (DELL), HP (HPQ), Dollar Tree (DLTR) and Nordstrom (JWN).
Reading the minutes from the FOMC, which sets monetary policy, should show officials expecting a half-point rate hike at their December meeting.
DataTrek’s Nicholas Colas points out that the odds of more aggressive monetary policy next year have increased in the past week, both in terms of the peak in the fed funds rate and the end of next year.
About a week ago, futures were showing an 81% odd at 19% on a rate hike of 50 from 75 basis points next month after a softer consumer price index. After hawkish claims by officials about the need for further rate hikes, the odds of a 0.75% hike rose slightly to 24%.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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