Wall Street barreled as US stocks sank into a holiday-shortened week. Bond and equity markets are closed today for Thanksgiving day, while trading ends at 1 pm on Friday ET. The ^GSPC (S&P 500) dropped by 0.4%, while the ^DJI (Dow Jones Industrial Average fell about 0.1% or 45 points. Meanwhile, the tech-heavy ^IXIC (Nasdaq Composite) slipped by 1.1%. The focus now turns to the much anticipated Federal Reserve benchmark’s interest rate.
The Fed might raise the key policy rate to over 5% if the inflation rate does not drop. Discarding a 75-basis-point borrowing cost increase in December is yet off-the-table and ultimately premature. OPEC countries such as Saudi Arabia are discussing raising their output, resulting in extended oil losses. Besides, several Covid-19 deaths across China resurfaced the fears of new restrictions to curb recent outbreaks.
These two events have spurred concerns due to demand, with WTI (West Texas Intermediate) crude futures dropping to less than $80 per barrel. Hence, the US dollar rose against other currencies on concerns about new restrictions in China. ETH-USD Ethereum fell by 6% to less than $1,100, and the BTC-USD (Bitcoin) slid by 4% to less than $16,000 as crypto impact FTXs collapse permeated crypto markets.
On the other hand, DIS (Disney Shares) roared 6% despite a down trading day on different market parts. These downs resulted from media giant Bob Iger’s announcement to rehire its former chief executive officer, effective immediately. This week’s market movements come after a dull previous week on the market, with sentiment weighed down by the renewed higher interest rates concerns. For instance, the S&P 500 benchmark was at about 0.7%.
Overall, history shows that Thanksgiving week is often bullish. The S&P 500 gained an average of 0.5% over the past half-century during this holiday week, achieving a 68% positive return. Thus, the Federal Reserve minutes for November rate-setting are due to highlight a light economic calendar. Several other earnings are available for release on the corporate side, including Nordstrom (JWN), Dollar Tree (DLTR), HP, and Dell Technologies (DELL).
The FOMC that sets monetary policy will unveil a readout of minutes likely to showcase official planning about a half-point borrowing cost increase during the December meeting. Financial analysts point out the odds for a possible aggressive monetary policy resulting from the strict federal funds rate. Due to the hawkish assertions about further rate rises, the possibility of another 0.75% borrowing cost increase rose to about 24%.
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