U.S. stocks sank Monday as Wall Street barreled into a holiday-shortened trading week.
Equity and bond markets will be closed for Thanksgiving on Thursday and end trading at 1 p.m. ET on Friday.
The S&P 500 (^GSPC) fell 0.4%, while the Dow Jones Industrial Average (^DJI) slipped roughly 45 points, or 0.1%. The technology-heavy Nasdaq Composite (^IXIC) declined 1.1%.
Investors assessed more Fedspeak in the final hour of Monday's session. Federal Reserve Bank of San Francisco President Mary Daly said officials may lift the U.S. central bank'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 "nothing is off the table."
"I tend to be on the more hawkish side of the distribution” Daly said in a conference call, referring to the spectrum of her colleagues from most aggressive on tightening policy to least.
Oil extended losses following reports Saudi Arabia and other OPEC countries are discussing an output increase. A series of COVID-related deaths in China also resurfaced fears the country may implement fresh restrictions to mitigate recent outbreaks. Both events spurred concerns over demand, with West Texas Intermediate (WTI) crude futures falling below $80 per barrel.
The U.S. dollar gained against other currencies on concerns around the COVID picture in China.
Bitcoin (BTC-USD) slid 4% below $16,000 and ethereum (ETH-USD) tumbled 6% to just below $1,100 as the impact of cryptocurrency exchange FTX's collapse continued to permeate crypto markets.
Meanwhile, shares of Disney (DIS) roared 6% despite a down day in other areas of the market after the media giant made a surprise announcement late Sunday that former chief executive Bob Iger will return to lead 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 higher interest rates. The benchmark S&P 500 was down about 0.7% for the period and the Nasdaq 1.6%, while the Dow was roughly flat.
Historically, the week of Thanksgiving has tended to be bullish. Over the past half century, the S&P 500 has gained an average 0.5% during the holiday week and 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 at an average gain of 0.3%, while the day after, 66% of the time, averaging a 0.2% increase.
"The stock market’s 'lower-inflation' bump lost some momentum last week, but bulls hoping for the rally to get back on track may be looking at historical trading tendencies around Thanksgiving," 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 so inclined: Even amid a shortened trading week, the SPX since 1950 has moved nearly as much during Thanksgiving week as it did during its average five-day trading period."
Investors are in for a quiet few days. Minutes from the Federal Reserve’s November rate-setting meeting due out Wednesday are the highlight of a light economic calendar this week. On the corporate side, a few more earnings are set for release, including Dell Technologies (DELL), HP (HPQ), Dollar Tree (DLTR), and Nordstrom (JWN).
The readout of minutes from the FOMC, which sets monetary policy, is likely to show officials planning a half-point rate hike at their December meeting.
DataTrek’s Nicholas Colas points out that the odds for more aggressive monetary policy next year increased last week, both in terms of where the federal funds rate will peak and where they end next year.
About one week ago, futures pointed to 81% to 19% odds on a 50- versus 75-basis-point rate hike next month after a lighter consumer price index. After hawkish assertions from officials about the need for further rate increases, the odds of a 0.75% hike have moved up slightly to 24%.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc