U.S. stocks have fallen since the S&P 500’s 2023 high as bond yields rose.

adminDecember 4, 2023

After the Dow Jones Industrial Average and S&P 500 index closed at 2023 highs last week, U.S. stocks took a breather and closed slightly lower on Monday as enthusiasm over the possibility of a Federal Reserve interest rate cut cooled somewhat.

How were the stocks traded?

The Dow DJIA index closed at 36,204.44, down 41.06 points (0.1%), continuing its upward trend for the fourth straight day.
The S&P 500 SPX index closed down 24.85 points, or 0.5%, at 4,569.78.
The Nasdaq Composite Index closed at 14,185.49, down 119.54 points (0.8%).
Small-cap stocks bucked the weakness, with the Russell 2000 RUT rising 1% to close at 1,882.02, outperforming the broader market and rising for the fourth straight day. In 2024, small-cap stocks lagged far behind large-cap stocks, up just 6.9% compared to the S&P 500’s 18.8% year-to-date gain and the Nasdaq’s 35.5% gain.

On Friday, the Dow, S&P 500 and Nasdaq Composite all posted their fifth straight week of gains. The Dow closed at its highest since January 12, 2022, and the S&P 500 closed at its highest since March 30, 2022.

What is driving the market?

Stocks have rebounded over the past five weeks as Treasury yields have fallen on expectations of a Federal Reserve rate cut next year.

Need to know: An award-winning technology strategist says a stock market top could come as early as this week.

But yields moved higher on Monday, with the 10-year BX:TMUBMUSD10Y yield rising 6.1 basis points to 4.286%. Rates fell on Friday even after Federal Reserve Chairman Jerome Powell withdrew interest rate cut speculation, saying the central bank was prepared to raise rates again if necessary.

read: Dow hits record high as traders call Fed’s bluff ‘the higher the longer’.

It’s been a busy week for economic data, but Friday’s U.S. jobs report said: “This week is likely to end with a bang or a whimper, as expectations of steady U.S. growth over the coming month appear to be pricing in.” Bob Savage, head of market strategy and insights at BNY Mellon, said in his note:

“Both markets can’t rally together for long without something breaking,” he said.

Early last week, encouraging inflation data and comments from Federal Reserve President Christopher Waller helped boost interest rate cut expectations. A new weak reading on manufacturing from the Institute for Supply Management on Friday also boosted those hopes.

The S&P 500’s technical backdrop is “encouraging” a break above 4,600, although it may take a few attempts due to overbought conditions, according to Adam Turnquist, chief technical strategist at LPL Financial.

see: The spectacular stock market rally was built on hopes of a ‘soft landing’. Why the economy doesn’t come out of the woods.

Gold price GC00 hit a new intraday high due to expectations of a Federal Reserve interest rate cut.
-1.99%
Although the metal came off on Sunday and again on Monday. Bitcoin BTCUSD,
+0.40%
It briefly surpassed $42,000, a level not seen since April 2022.

A company that attracts attention

Ride-hailing app market share Uber Technologies Inc.
uber,
+2.23%
The stock rose 2.2% after S&P Dow Jones Indices announced Friday that it would be added to the S&P 500 on Dec. 18. Builders First Source Co., Ltd.
BLDR,
-1.74%
electronics manufacturer Jabil Ltd.
J.B.L.,
-1.33%
Inclusion could not be withdrawn.
Alaska Airlines Group Inc.
alk,
-14.22%
It announced a deal Sunday to acquire Hawaiian Airlines for about $1.9 billion. Under the terms of the deal, Alaska Airlines will pay $18 per share in cash, and Hawaiian Airlines’ net debt will be approximately $900 million. The price is the same as Friday’s closing price of $4.86 plus a 270% premium. Hawaiian Holdings, Inc. Share HA,
+192.59%
Shares of Alaska Airlines fell 14.2%, while shares rose 192.6% to $14.22.