Stocks fall, oil slips to start holiday-shortened week

US stocks fell on Monday as Wall Street plunged into a holiday-shortened trading week.

The stock and bond markets will close for Thanksgiving on Thursday and end trading on Friday at 1 p.m. ET.

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

Oil Extends Losses According to Reports Saudi Arabia and other OPEC countries are discussing increasing production. A string of COVID-related deaths in China also resurfaced, amid fears the country could introduce new restrictions to contain recent outbreaks. Both events fueled demand concerns, with West Texas Intermediate (WTI) crude oil futures falling more than 5% to around $75 a barrel on Monday morning.

The US dollar strengthened against other currencies on concerns over the COVID picture in China.

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

Meanwhile, despite a down day elsewhere in the market, shares of Disney (DIS) rose 6% after the media giant surprisingly announced late Sunday that former CEO Bob Iger will return to the company as CEO, effective immediately conduct.

Disney Chief Executive Officer Bob Iger speaks during the Bloomberg Global Business Forum in New York City, New York, U.S. September 25, 2019. REUTERS/Shannon Stapleton

Disney Chief Executive Officer Bob Iger speaks during the Bloomberg Global Business Forum in New York City, New York, U.S. September 25, 2019. REUTERS/Shannon Stapleton

Monday’s moves come after a lackluster week on Wall Street, during which renewed concerns about higher interest rates weighed on sentiment. The benchmark S&P 500 lost about 0.7% and the Nasdaq 1.6% over the period, while the Dow was roughly flat.

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

“The stock market’s ‘lower inflation wave’ lost some momentum last week, but bulls hoping for the rally to get back on track may be looking to historical trading tendencies around Thanksgiving,” said Chris Larkin, Morgan Stanley’s managing director of trading E* TRADE said in a note. “While people are taking Thanksgiving off, the stock market isn’t as inclined: Even in the midst of a shortened trading week, the SPX has moved almost as much during Thanksgiving week as it has during its average five-day trading period since 1950.”

Investors are in for a few quiet days. Minutes from the November Federal Reserve meeting, due on Wednesday, are the culmination of a light economic calendar this week. On the corporate side, there are a few more earnings to report 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 rising interest rates as Federal Reserve officials signal more rate hikes to further slow inflation.  (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)

The reading of the FOMC minutes, which set monetary policy, is likely to show officials planning a half-point rate hike at their December meeting.

DataTrek’s Nicholas Colas points out that the odds of more aggressive monetary policy next year have increased over the past week, both in terms of where the federal funds rate will peak and where it will end next year.

About a week ago, futures were pointing to an 81% to 19% chance of a 50 basis point rate hike versus 75 basis points next month after a lighter CPI. After hawkish claims by officials about the need for more rate hikes, the odds of a 0.75% hike edged up slightly to 24%.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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