Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, USA, November 17, 2023.
Brendan Mcdermid | Portal
Stocks fell on Monday as traders took a breather after major averages snapped a four-week winning streak.
The Dow Jones Industrial Average lost 56.68 points, or 0.16%, to 35,333.47. The S&P 500 lost 0.20% to 4,550.43. The Nasdaq Composite fell 0.07% to 14,241.02.
Wall Street has had its fourth straight positive week as stocks have risen since the 10-year Treasury yield retreated from the 5 percent level it briefly exceeded in late October. The S&P 500 is up 8.5% so far this month, while the Dow is up 6.9% and the Nasdaq is up 10.8%.
The rally came despite warnings from some U.S. retailers that consumer spending is slowing, although e-commerce spending on Black Friday rose 7.5% from a year ago.
Some e-commerce stocks rose on Cyber Monday, with shares of Amazon and Shopify rising 0.7% and 4.9%, respectively. Affirm’s buy now, pay later shares rose nearly 12% as shoppers flocked to take advantage of BNPL options for their Cyber Monday purchases.
The overall weak spending data could ultimately be a positive signal that the Federal Reserve’s rate hikes are finally starting to weigh on the overall economy.
“A consumer slowdown would likely be a catalyst for the market because it would help underpin the basis for the rally,” said Quincy Krosby, chief global strategist at LPL Financial. “This market has benefited from a strong underpinning, a strong confidence that the Fed is not only finished with its rate hike campaign, but also that it will begin cutting rates in 2024.”
Krosby, who said the market has been in a short-term overbought state for several sessions, added that the 10-year Treasury yield will be crucial to this week’s moves, especially after this week’s Fed commentary and important consumer data confidence and inflation.
Phillip Colmar, managing partner and global macro strategist at MRB Partners, also said stocks continued to be driven by the bond market. Stocks remain slightly overbought, he said, adding that the economy remains “pretty resilient,” making it harder to justify future rate cuts.
“I think the economy is still stable and I think we are already in a bit of a sideways turnaround phase in bonds,” Colmar said. “As we move into next year, the real question is whether the 10-year Treasury will bottom out and then perhaps even strengthen again, which in this case would take some of the momentum out of the stock market.”
The consumer confidence report is due out on Tuesday, while the personal consumption expenditure price index is scheduled to be released on Thursday.
According to the Commerce Department, data released Monday showed new home sales in October were slower than expected but still improved compared to a year ago.