Stocks opened the day with a notable downturn, as skepticism regarding a potential US interest-rate cut cast a shadow over the market’s outlook.The S&P 500 (^GSPC) experienced a 0.8% decline, while the Dow Jones Industrial Average (^DJI) saw a 0.4% drop, translating to roughly 150 points. The tech-dominated Nasdaq Composite (^IXIC) fared worse, tumbling 1%.
Stocks had previously celebrated five consecutive weekly victories, propelled by the prevailing belief that the Federal Reserve would initiate rate cuts early next year. Despite this optimism, recent days have witnessed a downturn in Treasury yields, even after Federal Reserve Chair Jerome Powell countered speculations about an end to rate hikes.
Both stocks and bonds are currently on the decline in the Wall Street landscape, as an increasing number of analysts caution against the exuberance witnessed in these assets. The 10-year Treasury yield (^TNX) rose by 5 basis points to approximately 4.25%.
Investors are anxiously awaiting the release of the November jobs report, scheduled for Friday, as it holds the potential to disrupt the ongoing market rally. The impact of the report depends on whether it contradicts the prevailing belief that the Federal Reserve has concluded its rate hikes. A cooling labor market is considered a crucial factor influencing policymakers’ decisions.
In other market developments, hopes of a Federal Reserve pivot provided a boost to bitcoin (BTC-USD) prices, pushing them beyond $41,000—a level not seen since the 2022 cryptocurrency downturn. The anticipation of the Securities and Exchange Commission (SEC) approving US spot bitcoin ETFs in January also contributed to gains in other digital currencies.
Meanwhile, individual stocks made headlines as Hawaiian (HA) shares surged by an astonishing 190% following Alaska Air’s (ALK) announcement of its intent to acquire the beleaguered fellow airline. Alaska Air’s shares, on the other hand, experienced a decline of about 12% in the wake of the news. The acquisition is set to be executed at close to four times Friday’s closing price, signaling a significant development in the airline sector.
*In conclusion, the day unfolded with a distinct tone as stocks opened the day facing headwinds, reflecting the prevailing uncertainty and skepticism surrounding the prospects of a US interest-rate cut. All eyes are on the upcoming jobs report and its potential to influence the Federal Reserve’s policy trajectory. The recent retreat in both stocks and bonds underscores the cautious sentiment prevailing on Wall Street, with analysts warning against excessive optimism in the current market conditions.
Source: Yahoo Finance
