US stocks plunged on Monday as Wall Street entered a shorter trading week due to the holidays.
The equity and bond markets will be closed on Thursday for Thanksgiving and end trading on Friday at 1 pm ET.
The S&P 500 (^GSPC) fell 0.4%, while the Dow Jones Industrial Average (^DJI) fell roughly 45 points, or 0.1%. The tech-heavy Nasdaq Composite (^IXIC) declined 1.1%.
Investors priced in more Fedspeak in the final hour of the session on Monday. Federal Reserve Bank of San Francisco President Mary Daly said officials could raise the key US central bank policy rate above 5% if inflation does not abate. Daly also noted that canceling a 75 basis point increase in December is “premature” and that “nothing is out of the question.”
“I tend to be on the more aggressive side of the distribution,” Daly said in a conference call, referring to the spectrum of his colleagues, from most to least aggressive on tightening policy.
Oil extended losses after reports that Saudi Arabia and other OPEC countries are discussing a production increase. A spate of COVID-related deaths in China has also raised fears that the country may implement new restrictions to mitigate recent outbreaks. Both events raised demand concerns, with West Texas Intermediate (WTI) crude futures dipping below $80 a barrel.
The US dollar gained against other currencies on concerns over the COVID outlook in China.
Bitcoin (BTC-USD) slid 4% below $16,000 and Ethereum (ETH-USD) fell 6% to just below $1,100 as the impact of the collapse of cryptocurrency exchange FTX continued to permeate markets. crypto markets.
Meanwhile, shares of Disney (DIS) rose 6% despite a down day in other areas of the market after the media giant made a surprise announcement Sunday night that former chief executive Bob Iger will return to lead the company as Chief Executive Officer, effective immediately.
Monday’s moves come after a lackluster week on Wall Street, with sentiment weighed down by renewed concerns about higher interest rates. The benchmark S&P 500 Index was down about 0.7% over the period and the Nasdaq was down 1.6%, while the Dow Jones was mostly 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 achieved a positive return 68% of the time, according to data from Schaeffer’s Investment Research. The Wednesday before Thanksgiving has been positive 78% of the time with an average increase of 0.3%, while the day after it has been positive 66% of the time, with an average increase of 0.2%.
“The stock market’s ‘lower inflation’ rise lost some momentum last week, but bulls hoping for the rally to get back on track may be looking at historical trading trends around Thanksgiving.” , Chris Larkin, Morgan Stanley’s managing director of E* trading. COMMERCE said in a note. “While people take time off around Thanksgiving, the stock market isn’t as tilted: Even in the midst of a shorter trading week, the SPX since 1950 has moved almost as much over the week Thanksgiving as it did during your average five-day trading period.”
Investors expect a few quiet days. Minutes from the Federal Reserve’s November rate-setting meeting to be released on Wednesday are the highlight of a light economic calendar this week. On the corporate side, a few more gains will be released, including Dell Technologies (DELL), HP (HPQ), Dollar Tree (DLTR), and Nordstrom (JWN).
A reading of the FOMC minutes, which sets monetary policy, is likely to show officials planning a half-point rate hike at their December meeting.
DataTrek’s Nicholas Colas notes that the odds for more aggressive monetary policy next year increased last week, both in terms of where the fed funds rate will peak and where it will end up next year.
About a week ago, futures were pointing to an 81% to 19% probability of a 50 vs. 75 basis point rate hike next month after a lighter consumer price index. After aggressive assertions from officials about the need for more rate hikes, the odds of a 0.75% hike rose slightly to 24%.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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