US stocks fell Monday as Wall Street entered a shorter trading week.
Stock and bond markets remain closed Thanksgiving on Thursday and end trading at 1pm ET on Friday.
Investors rated more Fedspeak in the final hour of Monday’s session. President of the Federal Reserve Bank of San Francisco Mary Daly said officials are allowed to lift the US Federal Reserve’s key policy rate above 5% if inflation does not ease. Daly also noted that writing off a 75 basis point hike in December is “premature” and that “nothing is off the table.”
“I tend to be on the more aggressive side of distribution,” Daly said on a conference call, referring to her colleagues’ spectrum from most aggressive to policy tightening.
Oil Extended Losses After Reports Are Saudi Arabia And Other OPEC Countries discussing an increase in production. A series of COVID-related deaths fears also surfaced in China that the country could introduce new restrictions to mitigate recent outbreaks. Both events raised demand concerns, with West Texas Intermediate (WTI) crude oil futures falling below $80 a barrel.
The US dollar gained against other currencies on concerns about the COVID picture in China.
Meanwhile, shares of Disney (DIS) roared 6% despite a bad day in other parts of the market after the media giant made a surprise announcement late on Sunday former CEO Bob Iger returns to lead the company as CEO effective immediately.
Monday’s moves come after one poor week on Wall Street, with sentiment weighed down by renewed concerns about higher interest rates. The benchmark S&P 500 was down about 0.7% for the period and the Nasdaq 1.6%, while the Dow remained roughly flat.
Historically, the week of Thanksgiving has always been optimistic. Over the past half-century, the S&P 500 has averaged 0.5% gains during the holiday week and posted positive returns 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 day after returned an average of 0.2% gains 66% of the time.
“The rise in ‘lower inflation’ in the stock market lost some momentum last week, but bulls hoping the rally will get back on track may be looking to historic trading trends around Thanksgiving,” said Chris Larkin, managing director of trading. at Morgan Stanley’s E* TRADE said in a note. “While people take time off around Thanksgiving, the stock market isn’t as inclined. Even during a shorter trading week, the SPX has moved nearly as much during Thanksgiving week since 1950 as it has during the average five-day trading period.”
Investors are having a few quiet days. The minutes of the Federal Reserve’s rate-setting meeting in November, scheduled for Wednesday, are the culmination of a mildly economic calendar this week. On the business side, a few more earnings are being released, including Dell Technologies (DELL), HP (HPQ), money tree (DLTR), and Nordström (JWN).
The reading of the minutes of the FOMC, which sets monetary policy, will likely show officials planning a half-point rate hike at their December meeting.
DataTrek’s Nicholas Colas points out that the chances of more aggressive monetary policy next year increased last week, both in terms of where Federal Funds rates will peak and where they will end next year.
About a week ago, futures pointed to an 81% to 19% chance of a rate hike of 50 versus 75 basis points next month after a lighter consumer price index. After aggressive claims from officials about the need for further rate increases, the odds of a 0.75% increase have risen slightly to 24%.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc