Stocks pulled back on Monday as doubts crept in about the prospects for a US interest rate cut, with the key monthly jobs report on the horizon.
The S&P 500 (^GSPC) lost 0.7%, while the Dow Jones Industrial Average (^DJI) shed 0.3%, or roughly 120 points. The tech-heavy Nasdaq Composite (^IXIC) fell 1.1%, leading the way down.
Stocks rallied last month, lifting the gauges to five weekly wins in a row, as investors stuck with the idea that the Federal Reserve would start cutting rates early next year. Those expectations have also dragged down Treasury yields in recent days, even after Fed Chair Jerome Powell pushed back against talk of an end to rate hikes.
Both stocks and bonds are now in retreat on Wall Street as a growing chorus of analysts warn that the rally in those assets is overdone. The 10-year Treasury yield (^TNX) was up 6 basis points to about 4.28%.
The November jobs report, scheduled for release Friday, could also take the wind out of the rally's sails, depending on whether the data contradicts the notion the Fed is done with hikes. Cooling in the labor market is a key factor in policymakers' decision making.
Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards
Elsewhere in markets, those Fed pivot hopes helped boost bitcoin (BTC-USD) prices to top $41,000, levels last seen before the 2022 crypto rout. Other digital currencies also gained amid expectations the SEC will greenlight US spot bitcoin ETFs in January.
In individual stocks, Hawaiian (HA) shares skyrocketed about 190% after Alaska Air (ALK) said it will pay close to four times Friday's closing price to buy the troubled fellow airline. Alaska shares fell about 15%.
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JCarvana shares soars as JPM upgrades stock
Carvana (CVNA) has been on a bumpy ride this year but JPMorgan thinks the worst may be in the rearview mirror for the car retailer.
"The known unknowns around the CVNA story are better appreciated by investors today in our view and it is possible CVNA can execute its way through this uncertain macro and used car industry phase in a way that limits downside to near- and medium-term estimates," JPMorgan analyst Rajat Gupta wrote in a new research note on Monday.
JPMorgan boosted its price target to $40 from $25 while moving up its rating to Neutral from Underweight.
The stock soared nearly 20% on Monday.
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Stocks lose steam in afternoon trading
Despite November's robust rally and hopes that the worst of inflation's sting is behind us, investors are weighing the uncertainties heading into the new year. Strategists' forecasts for 2024 offer a range of views on the market outlook, including split opinions on whether valuations are realistic or overplayed.
The S&P 500 (^GSPC) lost 0.7%, while the Dow Jones Industrial Average (^DJI) shed 0.3% or roughly 100 points. The tech-heavy Nasdaq Composite (^IXIC) fell 1%. Bonds are also in retreat. The 10-year Treasury yield (^TNX) was up 6 basis points to about 4.29%.
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Virgin Galactic stock tanks after Richard Branson signals no more investments
Virgin Galactic (SPCE) founder Richard Branson said he wouldn’t be investing any more cash into his space travel company, sending the stock downward by as much as 15% on Monday, reports Yahoo Finance's Ines Ferré.
“We don’t have the deepest pockets after COVID, and Virgin Galactic has got $1 billion, or nearly," Branson told the Financial Times. "It should, I believe, have sufficient funds to do its job on its own.”
The billionaire founded Virgin Galactic in 2004 and helped take the startup public via a SPAC merger in 2019.
Last month the stock skyrocketed almost 20% in one day after the company announced it would cut 18% of its workforce and shift focus to a new spacecraft expected to be more profitable. A higher interest rate environment has prompted capital-intensive space-related companies like Virgin Galactic to devise ways to survive turbulent times.
Virgin Galactic's stock is down more than 40% so far this year. Shares had rallied nearly 50% over the past month prior to Monday’s drop.
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Crypto is having another 2023 moment
Bitcoin (BTC-USD), the dominant cryptocurrency, surpassed $42,000 Monday, reaching a new high for the year and seemingly moving past the industry's recent array of scandals that have weighed heavily on digital assets.
Investor sentiment has turned more optimistic in recent weeks, sending the value of digital tokens and the shares of crypto companies climbing. Investors are particularly interested in the potential for regulators to approve a crypto exchange-traded fund, giving investors greater exposure to digital assets without the full risk of owning them directly. The Securities and Exchange Commission is expected to weigh in on the applications next month.
Markus Thielen, head of research at DeFi Research.com, recently told Yahoo Finance Live that ETF approvals may push the price of bitcoin near $60,000, as investors move some of their funds into crypto. Signals that the Fed is likely finished with its tightening campaign as well as pent-up demand are also driving the run-up, Thielen said.
Crypto's positive turn late in the year also highlights what industry leaders say is a transition to a new chapter for the sector. Last month, the founder of the world's largest crypto exchange, Binance, pleaded guilty to federal money-laundering charges and resigned from his role as CEO. The Binance pleas came soon after the conviction of FTX co-founder Sam Bankman-Fried.
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Stocks trending in morning trading
Here are some of the stocks leading Yahoo Finance’s trending tickers page during morning trading on Monday:
Spotify (SPOT): Spotify stock climbed more than 5% Monday morning after the company announced its third round of layoffs for the year. The streaming giant plans to lay off 17% of its workforce or about 1,500 of its employees. CEO Daniel Ek announced the news in a letter to staff, saying that despite the streamer's recent efforts to boost margins, economic growth has "slowed dramatically" as higher interest rates squeeze profits amid increased capital expenses.
Hawaiian Holdings (HA): The parent of Hawaiian Airlines nearly tripled its stock price Monday after Alaska Air (ALK) agreed to acquire it for $1.9 billion, with an offer price of $18 per share.
Coinbase (COIN): The crypto hot streak blazes on and the major US platform for buying and selling digital currency is reaping the rewards. Shares of Coinbase rose nearly 8% Monday morning as bitcoin (BTC-USD) rose 5% and surpassed $41,000.
Uber (UBER): Shares of the ride-hailing company surged more than 5% Monday following confirmation that the stock will join the S&P 500, the widely followed benchmark index, giving the company even greater exposure, as institutional and retail investors buy into funds that invest in component stocks that make up the S&P.
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Wall Street retreats amid Fed uncertainty
Stocks pulled back Monday at the opening bell as doubts over the Fed's interest rate policy occupied the minds of investors and as they anticipate a key monthly jobs report scheduled to be published later this week.
The S&P 500 (^GSPC) lost 0.8%, while the Dow Jones Industrial Average (^DJI) shed 0.4% or roughly 150 points. The tech-heavy Nasdaq Composite (^IXIC) fell 1%.
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Spotify commits to another round of layoffs
Spotify (SPOT) plans to lay off 17%, or about 1,500, of its employees — its third round of layoffs this year.
Spotify CEO Daniel Ek announced the news in a letter to staff on Monday. The executive said that despite the streamer's recent efforts to boost margins, economic growth has "slowed dramatically" as higher interest rates squeeze profits amid increased capital expenses.
"I realize that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance," Ek said. "We debated making smaller reductions throughout 2024 and 2025."
But he said that given the gap between the company's financial goals and operational costs, he decided "that a substantial action to rightsize our costs was the best option to accomplish our objectives."
Spotify stock climbed about 6% higher in premarket trading on Monday following the news.
"The Spotify of tomorrow must be defined by being relentlessly resourceful in the ways we operate, innovate, and tackle problems," Ek continued. "This kind of resourcefulness transcends the basic definition – it’s about preparing for our next phase, where being lean is not just an option but a necessity."
The company laid off about 600 employees in January and another 200 workers in June.
According to an SEC filing, the company estimates that it will incur approximately 130 million euros to 145 million euros in charges in the current quarter, primarily consisting of severance-related pay and the impairment of real estate assets as a part of the staff reduction.
The latest round of job cuts comes after the streaming service turned a profit in the third quarter — its first quarterly profit in over a year following recent price hikes coupled with lower-than-expected costs related to personnel and marketing spend.
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