By Vivien Lou Chen and Mark DeCambre
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 /zigman2/quotes/210598065/realtime DJIA -0.56% 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 /zigman2/quotes/210599714/realtime SPX +0.08% 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 /zigman2/quotes/210598365/realtime COMP +0.59% 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.
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What drove the markets?
Markets were mixed on Monday in thin trading ahead of Thursday’s Thanksgiving Day holiday, with the Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.59% turning negative as the 10-year Treasury yield /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y 0.00% 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.
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.
“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.