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Dow breaks three-day losing streak, Nasdaq pulls back from record as Thanksgiving trading begins

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U.S. stock indexes ended mixed on Monday as investors embarked on a shortened vacation week, with Dow industry posting a three-day losing streak and the Nasdaq Composite recording its biggest daily drop in nearly two weeks.

The stocks dropped their earlier gains following President Joe Bidens’ decision to appoint Federal Reserve Chairman Jerome Powell for a second term as head of the U.S. central bank, as widely expected.

How stock indices traded
  • The Dow Jones Industrial Average DJIA,
    + 0.05%
    rose 17.27 points, or less than 0.1%, to end at 35,619.25. This is the largest single-day point and percentage gain since Nov. 16, according to Dow Jones market data.

  • The S&P 500 SPX,
    -0.32%
    fell 15.02 points, or 0.3%, to end at 4,682.94, after hitting an all-time intraday high of 4,743.83 at the start of trading.

  • The Nasdaq COMP Composite Index,
    -1.26%
    fell 202.68 points, or 1.3%, closing at 15,854.76 and declining from an intraday high of 16,212.23 set early in the session. This is the biggest drop in one day and in percentage since November 10.

Should know: Here’s why Santa could be jumping Wall Street this year

What drove the markets?

Markets were mixed on Monday in thin trading ahead of the Thanksgiving Thursday holiday, with the Nasdaq COMP Composite Index,
-1.26%
turning negative as the 10-year Treasury yield TMUBMUSD10Y,
1.629%
resumed the level of 1.6%.

The earlier buoyancy in the markets came after the White House announced that Biden had appointed Powell for a second four-year term. The announcement lifted some uncertainty for market participants in hopes of maintaining continuity within the Fed’s senior management during the economic recovery from the COVID-19 pandemic. Powell, considered a moderate Republican with a career in investment banking, was originally named president in 2017 by Donald Trump.

Some doubts about Powell’s name change at the head of the Fed persisted, with investors worried about rising inflation and speaking of the need for a more aggressive monetary policy by the Fed.

See: Here’s what Powells’ appointment for a second term as Fed chairman means for the markets

Biden also appointed Fed Governor Lael Brainard, who was seen as a possible replacement for Powell, as the Fed’s vice-chair.

The consensus was that President Powell would be nominated for a second term unsurprisingly today, wrote Jeff Klingelhofer, co-chief investment officer at Thornburg Investment Management, based in Santa Fe, New Mexico. With inflation concerns mounting on almost everyone’s mind, Brainard would have been harder for the market to digest as chairman. His vice-presidential nomination gives the Democrats a ballast for Powell and a likely regulatory victory.

US markets will be closed on Thursday and will see an abridged session on Friday. According to Bespoke Investment Group, Thanksgiving week has traditionally resulted in a modest gain for stocks dating back to 1945.

Read: Falling Real Yields Key to Market Recovery: What Investors Need to Know

Markets hate uncertainty, Larry Kochard, chief investment officer of Makena Capital, wrote in an email to MarketWatch. The reappointment removes one of the possible short-term risks facing the market. The continued leadership of the Fed, which skilfully managed monetary policy in a difficult economic environment, is now well received by the markets.

Despite all the external factors shaking the markets, they have maintained a record loft and consumers have been at the heart of the advance.

The National Retail Federation predicts that November and December holiday sales will increase 8.5% to 10% this year to about $ 850 billion, in part because of the higher cost of merchandise. But the good news is that people still have money to spend, even though they get less goods and services in exchange for what is spent, according to Ipek Ozkardeskaya, senior analyst at Swissquote.

On the data front, existing home sales for October rose nearly 1% to an annual rate of 6.34 million, ahead of economists’ estimates of 6.2 million and a rise of 6.29 million in September. .

The data precedes a massive dump of releases coming Wednesday, which will include an update on third-quarter gross domestic product, durable goods and personal income.

Elsewhere, there was some optimism about China’s easing of policy, after the People’s Bank of China reportedly cut several sentences about the political restriction in a report.

Still, the increase in COVID-19 cases and increasing restrictions in Europe have given some investors pause. In Europe, Austria launched its nationwide lockdown, which could extend to 20 days, amid weekend protests in Brussels and the Netherlands against increased restrictions elsewhere for the unvaccinated.

Remaining on the geopolitical front, Russian stocks fell amid concerns from the United States and Europe over a build-up of Russian troops on the Ukrainian border. Citing sources, Bloomberg Reportd that the United States has shared intelligence with European allies showing plans to invade Ukraine if President Vladimir Putin decides to go down that route.

Which companies were the center of attention?
  • Actions of Avaya Holdings Corp.AVYA shares jumped 22.4% on Monday after the company’s better-than-expected fourth quarter results.

  • Macys Inc. M,
    -2.71%
    announced plans to launch an organized digital marketplace alongside beating third-quarter earnings, with one analyst noting that this could ultimately amplify calls for Macys to launch e-commerce. Macys shares ended down 2.7%.

  • The Walt Disney Co.s DIS,
    + 0.10%
    The share closed 0.1% higher, after the company said Walt Disney World temporarily stopped selling most annual passes less than two months after relaunching the program following a hiatus. linked to the pandemic.

How did the other assets trade?
  • The yield of the 10-year Treasury bill TMUBMUSD10Y,
    1.629%
    rose 9 basis points to 1.625%. The yields and prices of debt move in opposite directions.

  • The ICE US Dollar DXY index,
    -0.07%,
    a measure of the currency against a basket of six major rivals, rose 0.5%.

  • Oil futures ended higher, with West Texas Intermediate CL00 crude,
    -0.46%
    for delivery in January, settlement stands at 81 cents, or 1.1%, to close at $ 76.75. GC00 December Gold Futures Contracts,
    + 0.27%
    fell $ 45.30, or 2.4%, to $ 1,806.30 an ounce.

  • The Stoxx Europe 600 SXXP,
    -0.13%
    closed down 0.1%, while London’s FTSE 100 UKX,
    + 0.44%
    ended up 0.4%.

  • In Asia, the Shanghai Composite SHCOMP,
    + 0.29%
    finished up 0.6%, while the Hang Seng HSI index,
    -0.96%
    closed 0.4% in Hong Kong. Chines CSI 300 000 300,
    + 0.19%
    advanced 0.5%, and Japan’s Nikkei 225NIK finished up nearly 0.1%.

Sources

1/ https://Google.com/

2/ https://www.marketwatch.com/story/u-s-stocks-futures-rise-as-historical-bullish-pre-thanksgiving-week-trading-begins-11637584001

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