U.S. Averages Pause After Rallying Five Weeks, Alaska Air to Acquire Hawaii Airlines

Barry Adams
04 Dec, 2023
New York City

Market indexes struggled to extend the rally of the previous week amid positive sentiment and optimism about the interest rate path.

The S&P 500 index and the Nasdaq Composite edged lower in early trading after two popular indexes advanced for five consecutive weeks in a row.

On Friday, the S&P 500 index closed at a new 2023 high and surpassed the high seen in March 2022 after investors supported the view that interest rates are near peak rates and the Federal Reserve may begin to cut rates in early 2024.

Federal Reserve Chairman Jerome Powell stressed that talks of rate cuts are "premature," but investors still bid up stocks in anticipation of another rate pause decision by policymakers at the end of a two-day meeting on December 13.

Market participants widely believe that interest rates are likely to stay on hold following the recent string of inflation data suggesting a steady decline over the last eight months, largely driven by a decline in the energy price and comparison with a higher base.

Despite the Federal Reserve talking tough on inflation and lifting rates by 11 times between March 2022 and July 2023, the economy is still expanding and wages are still gaining at rates that are inconsistent with the central bank's target rate of 2%.

Looking ahead, investors are awaiting nonfarm payroll data to be released on Friday, and economists are expecting the economy to add at least 175,000 net new jobs in November.

The November JOLT report is also scheduled to be released on Tuesday, and investors are anticipating job openings of 9.6 million, still higher than the pre-Covid high of 6.5 million in 2019.

 

U.S. Indexes and Yields

The S&P 500 index declined 0.2% to 4,565.03, and the Nasdaq Composite decreased 0.3% to 14,240.12.

The yield on 2-year Treasury notes increased to 4.62%, 10-year Treasury notes inched higher to 4.25%, and 30-year Treasury bonds were unchanged at 4.43%.

Crude oil decreased $0.84 to $73.23 a barrel, and natural gas prices fell 10 cents to $2.71 a thermal unit.

Gold decreased $1.25 to $2,070.05 an ounce after the U.S. dollar eased.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.34.

 

U.S. Stock Movers

Spotify Technology jumped 6.4% to $192.30 after the music streaming company announced its plan to lay off 1,500 employees, or 17% of its staff.

The company said it hired too many people in 2020 and 2021, and it needs to control its costs and adjust to new market realities.

Alaska Air Group declined 13.5% to $34.27 after the regional airline agreed to rival Hawaiian Airlines in a deal worth $1.9 billion.

Alaska Air agreed to pay $18 a share to the airline and assume $900 million of the company's debt.

Hawaii Airlines parent Hawaiian Holdings surged 181% to $13.65 in early trading, and cautious investors worried about the steep regulatory hurdles faced by the merger.

Coinbase Global jumped 9.2% to $146.10, and MicroStrategy advanced 8.2% to $571.0 after bitcoin surpassed the $40,000 level.

The surge in bitcoin also lifted the stock prices of other cryptocurrency-linked companies.

Marathon Digital Holdings soared 13% to $15.53, and Rio Platforms advanced 11.1% to $15.30.