Market Update: Temporary Setback as Stocks Catch Their Breath

After a strong rally in November, the stock market experienced a pullback on Monday, setting a cautious tone ahead of the crucial monthly jobs report. The S&P 500 (^GSPC) declined by 0.5%, and the Dow Jones Industrial Average (^DJI) slipped by 0.1%, around 40 points. Leading the downturn, the Nasdaq Composite (^IXIC) recorded a 0.8% decline.

November had seen a robust surge in stocks, securing five consecutive weekly wins as investors held onto the belief that the Federal Reserve would initiate rate cuts early next year. However, despite Fed Chair Jerome Powell dismissing talks of halting rate hikes, these expectations have recently weighed on Treasury yields.

Both stocks and bonds are now retreating on Wall Street, with a growing number of analysts cautioning against an excessive rally. The 10-year Treasury yield (^TNX) rose by 6 basis points, reaching around 4.28%.

As the market awaits the November jobs report scheduled for release on Friday, there’s anticipation that the data could shape the trajectory of the rally. The pivotal factor will be whether the data supports or contradicts the notion that the Fed has concluded its rate hikes, given the significance of labor market conditions in policymakers’ decision-making.

In other market developments, optimism about a potential Fed pivot pushed bitcoin (BTC-USD) prices beyond $41,000, reaching levels not seen since the 2022 crypto downturn. Expectations of SEC approval for US spot bitcoin ETFs in January also contributed to gains in various digital currencies.

Meanwhile, individual stock movements were noteworthy, with Hawaiian (HA) shares surging by approximately 190% following Alaska Air’s (ALK) announcement of its intention to acquire the troubled fellow airline at nearly four times Friday’s closing price. Conversely, Alaska shares declined by about 15%.