Stocks slipped on Monday as investors questioned whether the market was getting ahead of itself following five straight winning weeks.
The Dow Jones Industrial Average shed 41.06 points, or 0.11%, to close at 36,204.44. The S&P 500 dropped 0.54% to 4,569.78. The Nasdaq Composite declined 0.84% to 14,185.49 as investors sold Big Tech shares, which have led the market's gains this year.
As stocks stagnated, bitcoin and gold rallied to start the week. Bitcoin passed the $41,000 mark to notch a 19-month high, while gold reached its highest nominal intraday level ever.
Marathon Digital and Riot Platforms each jumped more than 8% as bitcoin advanced. MicroStrategy and Coinbase added 6.7% and 5.5%, respectively.
Alaska Air Group dropped 14.2% after it agreed to acquire rival Hawaiian Airlines for $1.9 billion. The move is part of Alaska's efforts to expand along the West Coast.
Monday's moves mark a pullback following a strong period in the market. Technology shares struggled in the session. Nvidia slid 2.7%, while Microsoft and Meta each lost more than 1%.
"Digestion is the word of the day," said Tom Hainlin, senior investment strategist at U.S. Bank Asset Management. "The sectors that are down today are basically the ones that carried the market for the better part of 11 months."
The broad S&P 500 posted its highest close since March 2022 on Friday, bringing its year-to-date gains to almost 20%. The blue-chip Dow is up more than 9% for the year, while the tech-heavy Nasdaq Composite has climbed 35% in 2023.
All three indexes clinched their fifth straight positive weeks last Friday. It was the first weekly win streak of that length since 2021 for the Dow.
The rebound in stocks since October came as investors increasingly bet that the Federal Reserve will start cutting interest rates next year. Investors maintained this belief last week even as Fed Chairman Jerome Powell tried to tamp down rate-cut expectations, saying it's "premature" to anticipate easing in policy.
November was the best month for the 30-stock Dow since October 2022. The S&P 500 and Nasdaq Composite both enjoyed their biggest monthly gains since July 2022.
Stocks finished Monday's session down, marking a turn after five straight winning weeks.
The S&P 500 and Nasdaq Composite slipped about 0.5% and 0.8%, respectively. Meanwhile, the Dow shed around 0.1%.
— Alex Harring
Small-cap stocks were in the green on Monday even as the major indexes turned negative.
The Russell 2000 gained 0.8% as of Monday afternoon. By comparison, the three major indexes were tracking for losses.
— Hakyung Kim
Evidence has emerged that the strong year-end rally was boosted by short covering, according to Raymond James.
"Fuel for this rally is aided by short interest, and that fuel is getting used up," the Wall Street firm's strategists said in a note.
They noted that the trailing 30-day correlation of short interest to returns of S&P 500 constituents the past month have spiked higher. Short covering occurs when a short seller buys back shares in order to close out an open short position — returning borrowed shares — in an attempt to limit losses that also drives further drive up the price of the underlying security.
"We would suspect there may be 1-2 weeks at most of the short covering fuel before we are at the correlation extremes seen earlier this year," Raymond James said.
— Yun Li
The Dow was on pace for a narrower loss than the other two major indexes in Monday's session, due in part to a group of advancers.
The blue-chip index was just 0.2% lower. By comparison, the S&P 500 and Nasdaq Composite, which have both performed better over the course of 2023, are tracking to close down by 0.7% and 1%, respectively.
Part of the Dow's outperformance came from gains of more than 3% in 3M and 1% in Merck, Nike and Home Depot. Those advances helped counterbalance the market selloff.
Still, the index was slated to end lower along as the broader market struggled. Technology stocks Intel and Salesforce were the worst performers in the average, with both poised to finish nearly 4% in the red.
— Alex Harring
Oppenheimer Asset Management is encouraged by this quarter's market rally.
"We remain positive on stocks and consider the broadening of the rally in equities across sectors and market capitalizations to be a constructive development," analyst John Stoltzfus wrote in a Monday note.
Third-quarter earnings results have been stronger than expected, with earnings growth of 4.5% from a year earlier on revenue gains of 1.9%, according to the note. Eight out of 11 of the S&P sectors are showing positive earnings growth, with four — communication services, consumer discretionary, financials and technology— gaining at double-digit rates.
The current year-end rally from the lows in October is constructive, Stoltzfus wrote, adding that, to be sure, it also raises some concern that gains during the fourth quarter may have taken equities to overbought levels.
"We are not getting bearish but can remember a tendency for powerful rallies from year end to be met with some questioning on any catalyst for profit taking without FOMO in the first quarter or second quarter of the new year," the analyst said.
— Pia Singh
Oil prices continued to decline on Monday despite production cuts announced by OPEC and its allies.
The West Texas Intermediate contract for January fell $1.03, or 1.39%, to to settle at $73.04 a barrel, while the Brent crude contract for February dropped 85 cents, or 1.08%, to settle at $78.03 a barrel.
Oil futures have declined 6% since Wednesday's close.
Several OPEC members and allied nations such as Russia, called OPEC+, announced last Thursday voluntary supply cuts of 2.2 million barrels per day for the first quarter of 2024.
But traders are skeptical that the group will actually deliver on the promised reductions, sending oil prices lower.
Saudi Energy Minister Prince Abdulaziz bin Salman told Bloomberg Monday that the curbs could continue beyond the first quarter of 2024. Prince Abdulaziz said he is confident that members will deliver on the announced reductions.
— Spencer Kimball
The Nasdaq Composite slumped more than 1% during Monday's session, led to the downside by shares of popular artificial intelligence names and megacaps. It was on track to post the biggest losses of the three major indexes.
Sirius XM was the biggest laggard in the concentrated Nasdaq-100, slumping 6.5%. Trade Desk and Zoom Video lost more than 4% each. Intel, Nvidia and Palo Alto Networks shed at least 3%.
Other major underperformers included Netflix, Alphabet and Advanced Micro Devices, last down about 2% each. Meta Platforms lost 2%, along with Micron Technology and Marvell Technology.
— Samantha Subin
The three major indexes continued trading lower as the final hour kicked off.
The Dow and S&P 500 slid 0.2% and 0.7%, respectively, as of shortly after 3 p.m. ET. The Nasdaq Composite was the worst performer of the three, shedding slightly more than 1%.
— Alex Harring
Two ETFs tied to the home-construction industry hit highs not seen in multiple years on Monday.
The iShares U.S. Home Construction ETF (ITB), which was created in 2006, hit an intraday high never seen before. The fund was helped by gains in Lowe's, Dream Finders, Hayward Holdings and LGI Homes.
Meanwhile, the SPDR S&P Homebuilders ETF (XHB) at one point touched its highest level since December 2001. In addition to Lowe's, Dream Finders and LGI, the fund was also aided by Tempur Sealy, MDC Holdings, Home Depot, Williams-Sonoma and Floor & Decor.
Both ETFs were last up by around 0.5%.
— Alex Harring, Gina Francolla
The voluntary oil production cut adopted by seven OPEC+ nations can "absolutely" continue past the first quarter if needed, Saudi Arabia's energy minister told Bloomberg in an interview Monday.
OPEC+ includes OPEC members as well as major oil-producing allies such as Russia.
The production cuts of 2.2 million barrels per day agreed last week will only be withdrawn through a "phased-in" approach based on market conditions, Saudi Energy Minister Price Abdulaziz bin Salman said.
The production cuts have been met with skepticism by traders with oil prices having fallen about 5% from last Wednesday through Friday's close.
Oil continued to fall on Monday with U.S. crude down 0.51% at $73.69 a barrel and global benchmark Brent down 0.38% at $78.58 a barrel.
"I honestly believe that the delivery of the 2.2 million will happen," Prince Abdulaziz told Bloomberg. "I honestly believe that 2.2 million will overcome even the usual inventory build that usually happens in the first quarter."
— Spencer Kimball
Alaska Air Group is on track to notch its worst day since the early days of the pandemic after agreeing to acquire a rival.
Shares tumbled nearly 15% on Monday. If that holds, it would be the worst day since March 18, 2020, when shares fell 22.8%.
The selloff follows Alaska's announcement that it will acquire rival Hawaiian Airlines in a $1.9-billion deal. It's part of Alaska's efforts to expand along the West Coast.
— Alex Harring, Chris Hayes
Twilio shares vacillated over the course of Monday's trading day after annoucing plans to layoff 5% of its workforce in an effort to streamline operations.
The cuts, expected to impact about 400 employees, will mainly focus on Twilio's Data & Applications business. The unit's been the recent target of activist investors who have put pressure on Twilio to sell the entire company, or divest that business.
The restructuring costs are expected to range between $25 and $35 million.
Earlier this year, Twilio laid off 17% of its workforce, or about 1,500 employees.
— Rohan Goswami, Samantha Subin
Defensive sectors, which lagged this year's market rally, outperformed on Monday. In fact, consumer staples, health care and utilities were among the best S&P 500 sectors in the session, though they remain down on the year.
Among the consumer staples outperformers were Estee Lauder shares. The cosmetics stocks gained more than 4% in midday trading, even as it's down more than 44% in 2023. Shares of J.M. Smucker and General Mills rose more than 1%, each.
Health care stocks such as IDEXX Laboratories and Illumina also outpaced the broader market, up 5% and 3%, respectively.
— Sarah Min
Check out the companies making headlines in midday trading:
— Pia Singh
Bitcoin and gold have both eased from their session highs as Monday trading continues, with the yellow metal now negative on the day.
Spot gold is now down 2% to about $2,024.19 per ounce after briefly trading above $2,100 on Sunday evening in New York.
Bitcoin is now up less than 5% for the session at $41,559 after topping $42,000 earlier in the day.
— Jesse Pound
Analysts on Wall Street think Uber has more room to run once the ride sharing stock joins the benchmark S&P 500. Shares gained more than 5% on Monday as investors cheered the announcement.
"Following the inclusion, we expect UBER to lean into growth and share buybacks, which should increase investor sentiment for growth/return in 2024," Oppenheimer analysts led by Jason Helfstein wrote. The firm maintained an outperform rating on Uber and raised its price target.
CNBC Pro subscribers can read the full story here.
— Brian Evans
Technology stocks dragged on the S&P 500 in Monday's session.
The information technology and communication services sectors, which are both known for their tech exposure, performed the worst in the S&P 500. Each fell more than 2%.
Meanwhile, the benchmark index shed around 1%. The materials sector posted the next biggest loss at just 1% down, underscoring the impact of the drop in technology shares on the broader index.
ANSYS, Intel and Palo Alto Networks led the information technology sector lower, tumbling more than 4% a piece. With slides of nearly 3% each, Meta, Alphabet and Netflix were the worst performers in the communication services sector.
— Alex Harring
Meta Platforms' co-founder Mark Zuckerberg sold stocks in his tech company in November, for the first time since November 2021, according to data compiled by Insiderscore.
The tech founder dumped about 682,000 shares last month in multiple trades through a 10b5 plan, which allows insiders to sell shares under a prearranged structure. The selling came as Meta enjoyed a stellar year, with shares soaring 170% amid investor enthusiasm towards its artificial intelligence efforts.
— Yun Li
Factory orders declined slightly more than expected in October, a sign of potential deceleration for the U.S. economy heading into the end of the year.
New orders for manufactured goods fell 3.6% on the month, 0.1 percentage point more than the Dow Jones estimate and a reversal from the downwardly revised 2.3% increase in September, the Commerce Department reported Monday.
Excluding transportation, orders were off 1.2% and fell 4.2% excluding defense. Orders for longer-lasting durable goods slid 5.4%.
—Jeff Cox
Wharton professor Jeremy Siegel believes that it's due time for the Federal Reserve to acknowledge the possibility of lowering rates come December's meeting, he told CNBC's "Squawk Box" on Monday morning.
He said the Fed was way too late to raise rates in the last hiking cycle, but hopes that the U.S. central bank will take more proactive measures this time around.
"That should be a part of the conversation given the softness of the data that we've honestly seen over the last four weeks," he said. "They can't be anywhere near as stubborn as they were on raising rates as they will have to be on lowering rates."
Siegel clarified that he doesn't believe a recession is inevitable. But cutting rates and increasing the money supply are the biggest chance for the Fed to realize the soft landing it desires, he added.
— Lisa Kailai Han