Stocks fall, oil slides into holiday-shortened week

U.S. stocks fell on Monday as Wall Street entered the holiday trading week.

Stock and bond markets will be closed for Thanksgiving on Thursday and will end trading on Friday at 1:00 PM ET.

The S&P 500 (^GSPC) lost 0.6%, while the Dow Jones Industrial Average (^DJI) lost nearly 100 points, or 0.3%. The tech-heavy Nasdaq Composite ( ^IXIC ) fell 0.9%.

Oil increased its losses after reports that Saudi Arabia and other OPEC countries are discussing increasing production. A series of COVID-related deaths in China have also rekindled fears that the country may introduce new restrictions to ease recent cases. Both events fueled concerns about demand, with West Texas Intermediate (WTI) crude futures down more than 5% to $75 a barrel on Monday morning.

The US dollar has gained against other currencies due to concerns about the COVID landscape in China.

Bitcoin (BTC-USD) fell 3% to close at $16,000 and ethereum (ETH-USD) fell 5% to just above $1,100 as the impact of the collapse of cryptocurrency exchange FTX continued to permeate the crypto markets.

Meanwhile, Disney ( DIS ) shares rose 6% despite a down day elsewhere in the market after the media giant made a surprise announcement on Sunday that former chief executive Bob Iger would return to the company as CEO.

Disney CEO Bob Iger speaks at the Bloomberg Global Business Forum in New York, New York, U.S., September 25, 2019. REUTERS/Shannon Stapleton

Monday’s moves came after a weak week on Wall Street, with renewed concerns about high interest rates easing. The S&P 500 was down about 0.7% for the period, the Nasdaq was down 1.6%, and the Dow was roughly flat.

Historically, Thanksgiving week tends to be bullish. Over the past half-century, the S&P 500 has gained an average of 0.5% during the holiday week and has had a positive return 68% of the time, according to data from Schaeffer’s Investment Research. The Wednesday before Thanksgiving was 78% positive, with an average increase of 0.3%, and the day after was 66%, with an average increase of 0.2%.

“The stock market’s ‘low-inflation’ rally lost some momentum last week, but bulls hoping to get the rally back on track can look to historical trading trends around Thanksgiving,” Chris Larkin, managing director of Morgan Stanley’s E* trading, said in a TRADE note. “Although people take their time around Thanksgiving, the stock market isn’t so inclined: Even in a shortened trading week, since 1950 the SPX has moved as much during the week of Thanksgiving as it has during the average five-day trading period.”

Investors have had a quiet few days. Wednesday’s minutes of the Federal Reserve’s November rate-setting meeting are the highlight of the light economic calendar this week. On the corporate side, several more earnings are slated for release, including Dell Technologies (DELL), HP (HPQ), Dollar Tree (DLTR), and Nordstrom (JWN).

NEW YORK, NEW YORK - NOVEMBER 17: Traders work on the floor of the New York Stock Exchange during morning trading on November 17, 2022 in New York City.  Stocks are expected to fall as the stock market opens with interest rates rising as Federal Reserve officials signal more rate hikes to keep inflation from slowing.  (Photo by Michael M. Santiago/Getty Images)

NEW YORK, NEW YORK – NOVEMBER 17: Traders work on the floor of the New York Stock Exchange during morning trading on November 17, 2022 in New York City. (Photo by Michael M. Santiago/Getty Images)

A reading of the FOMC minutes, which set monetary policy, will probably show that officials plan to raise interest rates by half a point at the 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 it will end next year.

About a week ago, futures pointed to 81-19% next month versus 50-75 following a lighter consumer price index. The probability of a 0.75% hike rose slightly to 24% after officials made clear statements about the need for further rate hikes.

Alexandra Semenova is a correspondent for Yahoo Finance. Follow him on Twitter @alexandraandnyc

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