an interest rate cut

Stocks Retreat Amidst Doubts on US Interest Rate Cut

Wall Street experienced a retreat on Monday as uncertainty cast a shadow over the likelihood of a US interest rate cut, with the eagerly awaited monthly jobs report on the horizon.

The S&P 500 (^GSPC) experienced a 0.5% decline, with the Dow Jones Industrial Average (^DJI) shedding 0.1%, equivalent to approximately 40 points. Simultaneously, the Nasdaq Composite (^IXIC), dominated by technology stocks, recorded a drop of around 0.8%, spearheading the downward trend.

Last month witnessed a robust stock rally, propelling the indices to five consecutive weekly gains. Investors clung to the belief that the US Federal Reserve would initiate an interest rate cut early next year. However, these expectations have recently subdued Treasury yields, even after Federal Reserve Chair Jerome Powell pushed back against speculation of an imminent end to rate hikes.

Both stocks and bonds are now experiencing a retreat on Wall Street, as an increasing number of analysts caution that the surge in these assets may be excessive. The 10-year Treasury yield (^TNX) saw a rise of 6 basis points, reaching approximately 4.28%.

The November jobs report, scheduled for release this Friday, holds the potential to deflate the recent rally, depending on whether the data contradicts the prevailing notion that the Federal Reserve has concluded its rate hikes. The labor market’s cooling is a pivotal factor influencing policymakers’ decisions.

In other corners of the financial markets, the hopes surrounding the Federal Reserve’s pivot have contributed to a surge in Bitcoin (BTC-USD) prices, surpassing the $41,000 mark. These levels were last observed prior to the crypto rout in 2022. Other digital currencies also experienced gains, fueled by expectations that the Securities and Exchange Commission (SEC) will grant approval for U.S. spot Bitcoin ETFs in January.

Turning to individual stocks, Hawaiian (HA) shares soared by an astounding 190% after Alaska Air (ALK) announced its intention to acquire the beleaguered fellow airline at nearly four times Friday’s closing price. Conversely, Alaska Air’s shares tumbled by approximately 15%.

As Wall Street navigates through these uncertainties, market participants are closely eyeing the upcoming jobs report, which could potentially shape the trajectory of the financial markets in the days to come.
Source: Yahoo Finance

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