Dow snaps three-day losing streak, Nasdaq retreats from record as Thanksgiving trading kicks off

U.S. stock benchmarks finished mixed on Monday as investors kicked off a holiday-shortened week, with the Dow industrials snapping a three-day losing streak and the Nasdaq Composite posting its biggest daily drop in almost two weeks.

Equities gave up earlier gains that followed President Joe Biden’s decision to nominate Federal Reserve Chairman Jerome Powell to a second term as head of the U.S. central bank, as widely expected.

How stock benchmarks traded
  • The Dow Jones Industrial Average
    rose 17.27 points, or less than 0.1%, to end at 35,619.25. It was the largest one-day point and percentage gain since Nov. 16, based on Dow Jones Market Data.

  • The S&P 500
    fell 15.02 points, or 0.3%, to finish at 4,682.94, after hitting an intraday all-time high at 4,743.83 in early trade.

  • The Nasdaq Composite Index
    fell 202.68 points, or 1.3%, closing at 15,854.76 and retreating from an intraday record at 16,212.23 set early in the session. It was the largest one-day point and percentage decline since Nov. 10.

Need to know: Here’s why Santa may skip Wall Street this year

What drove the markets?

Markets were mixed on Monday in thin trading ahead of Thursday’s Thanksgiving Day holiday, with the Nasdaq Composite Index
turning negative as the 10-year Treasury yield
retook the 1.6% level.

The market’s earlier buoyancy came after the White House announced that Biden had nominated Powell to a second four-year term. The announcement removed some uncertainty for market participants hoping to maintain continuity in the Fed’s top leadership during the economic recovery from the COVID-19 pandemic. Powell, viewed as a moderate Republican with a career in investment banking, originally was nominated to be chairman in 2017 by Donald Trump.

Some doubts about Powell being renamed to the head of the Fed were lingering, with investors anxious about rising inflation and talk of the need for more aggressive Fed monetary policy.

See: Here’s what Powell’s nomination for second term as Fed chairman means for markets

Biden also nominated Fed Gov. Lael Brainard, who was seen as a possible replacement for Powell, to serve as Fed vice chairwoman.

“The consensus was Chair Powell would be nominated for a second term—no surprises today,” Jeff Klingelhofer, co-head of investments at Santa Fe, New Mexico-based Thornburg Investment Management, wrote in an email. “With elevating inflation concerns on just about everyone’s mind, Brainard would have been more difficult for the market to digest as chair. Her appointment to vice chair offers Democrats a ballast to Powell and a likely regulatory win.”

U.S. markets will be closed Thursday and see an abbreviated session Friday. According to Bespoke Investment Group, Thanksgiving week has traditionally resulted in a modest gain for stocks dating back to 1945.

Read: Falling real yields are a key to the stock-market rally: What investors need to know

“Markets hate uncertainty,” Larry Kochard, chief investment officer of Makena Capital, wrote in an email to MarketWatch. “Reappointment removes one of the possible short-term risks facing the market. Continuation of Fed leadership, which has deftly managed monetary policy during a challenging economic environment, is being well-received by the markets today.”

Despite all the external factors buffeting markets, they have maintained record-setting loft and consumers have been at the heart of the advance.

The National Retail Federation is predicting November and December holiday sales will rise 8.5% to 10% this year to around $850 billion, part of that comes from the higher cost of goods. “But the good news is, people still have money to spend, even though they get less goods and services in exchange of what’s spent,” according to Ipek Ozkardeskaya, senior analyst at Swissquote.

On the data front, existing home sales for October rose by nearly 1% to a 6.34 million annual rate, ahead of economists’ estimates for 6.2 million and a 6.29 million rise in September.

The data comes ahead of a massive dump of releases coming Wednesday, which will include an update to third-quarter gross domestic product, durable goods and personal income.

Elsewhere, there was some optimism for China policy easing, after the People’s Bank of China reportedly cut several phrases about policy restraint in a report.

Still, rising COVID-19 cases and increased restrictions in Europe have given some investors pause. In Europe, Austria kicked off its national lockdown, which could extend to 20 days, amid weekend protests in Brussels and the Netherlands against increasing restrictions elsewhere for the unvaccinated.

Staying on the geopolitical front, Russian stocks tumbled amid U.S. and Europe concerns about a Russia troop buildup on Ukraine border. Citing sources, Bloomberg reported that the U.S. has shared intelligence with European allies that shows plans for an invasion into Ukraine, should President Vladimir Putin decide to go that route.

What companies were in focus?
  • Shares of Avaya Holdings Corp. AVYA shares jumped 22.4% on Monday after the company’s better-than-expected fourth-quarter results. 

  • Macy’s Inc.
    announced plans to launch a curated digital marketplace alongside third-quarter profit that soared past expectations, with one analysts noting it might “ultimately amplify calls for Macy’s to spin off e-commerce.” Macy’s shares ended 2.7% lower.

  • The Walt Disney Co.’s
    shared closed up 0.1%, after the company said Walt Disney World temporarily stopped selling most annual passes less than two months after reviving the program following a pandemic-related pause.

How did other assets trade?
  • The yield on the 10-year Treasury note 
    rose 9 basis points to 1.625%. Yields and debt prices move in opposite directions.

  • The ICE U.S. Dollar Index 
     a measure of the currency against a basket of six major rivals, was up 0.5%.

  • Oil futures ended higher, with West Texas Intermediate crude
    for January delivery settling 81 cents, or 1.1%, higher to close at $76.75. December gold futures
    fell $45.30, or 2.4%, to settle at $1,806.30 an ounce.

  • The Stoxx Europe 600 
    closed 0.1% lower, while London’s FTSE 100 
    finished up by 0.4%.

  • In Asia, the Shanghai Composite
     finished 0.6% higher, while the Hang Seng Index 
     closed down by 0.4% in Hong Kong. China’s CSI 300 
     advanced 0.5%, and Japan’s Nikkei 225 NIK finished up by almost 0.1%.