Stock Rally Takes a Break as Crypto World Gets Hit: Markets Wrap
(Bloomberg) — The start of a historically strong month on Wall Street saw stocks falling as traders shunned riskier corners of the market amid a selloff in cryptocurrencies. A rout in Japanese debt rippled through global bonds.
Caution prevailed after a rally that drove the S&P 500 to its longest streak of monthly gains since 2021. The Russell 2000 gauge of small caps slid over 1%. Nearly $1 billion of leveraged crypto positions were liquidated during a sharp drop in prices that brought fresh momentum to a wide-ranging industry plunge. Bitcoin sank to around $85,000.
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Despite the reduced appetite for risk, Treasuries kicked off the week on the back foot as Japan’s bond yields climbed after comments from the central bank chief spurred rate-hike wagers.
Equities lost steam after investors wrapped up a choppy November with gains amid growing speculation that the Federal Reserve is more likely than not to ease policy this month.
“There’s some risk aversion creeping into the markets to start the week,” said Kyle Rodda at Capital.com. “At the moment, it looks benign and without a fundamental impetus.”
Fed officials will get a dated reading on their preferred inflation gauge before next week’s rate decision. The report due Friday is expected to show that inflationary pressures are stable, but sticky. Yet the debate will largely center on the job market when policymakers meet Dec. 9-10.
The S&P 500 briefly fell below 6,800, but closed slightly above it. Megacaps were mixed, with Alphabet Inc. down and Nvidia Corp. bouncing after Friday’s rout. Energy producers joined an advance in oil.
The yield on 10-year Treasuries rose eight basis points to 4.09%. The dollar wavered.
Data Monday showed US factory activity shrank in November by the most in four months. In addition to Friday’s inflation data, other relevant economic data this week include ADP private employment figures for November and a preliminary reading of consumer confidence in December.
Still, key data like the jobs report won’t arrive until after the December rate decision next week, which “drastically dilutes this week’s ability to spring any material surprises in as far as rate cut expectations are concerned,” noted Fawad Razaqzada at Forex.com.
“Stocks historically performed best when the economy is not in recession and the Fed is cutting interest rates,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management. “The latest available data suggest that the Fed is more likely to proceed with a 25-basis-point cut.”
She also noted that the current soft patch in the US economy is likely temporary, and global growth should accelerate in 2026.
“Robust earnings growth expectations should drive further equity gains,” said Hoffmann-Burchardi. “We also believe that earnings growth is a more important indicator of forward returns, and our earnings growth estimates for major markets in the coming year are in a solid range of 7% and 14%, supporting near-term upside.”
As for seasonality, at least the set-up for December looks favorable.
Since 1990, the S&P 500 recorded its second-best average price return in December and second-lowest level of volatility, while chalking up the highest frequency of advances, according to Sam Stovall at CFRA.
While the late-November momentum could carry forward, Adam Turnquist at LPL Financial noted that December’s strength typically emerges in the second half of the month.
Historically, since 1950, the S&P 500 has averaged a 1.4% gain in December and finished higher 73% of the time — the strongest positivity rate of any month, he said. When December is positive, the average gain is 2.9%, compared to an average loss of 2.6% in negative years.
For the S&P 500 going back to 1928, years when the index has been up more than 10% heading into December (like this year) have historically seen the strongest December returns with an average gain of more than 2%, according to Bespoke Investment Group.
“Seasonality, solid consumer spending despite grumpy sentiment, and year-end positioning all set the stage for a Santa Claus rally this year, most likely in the back half of the month,” said Mark Hackett at Nationwide.
Corporate Highlights:
Nvidia Corp. invested $2 billion in chip-design software maker Synopsys Inc. as part of a broader engineering and design tie-up, aiming to infuse its AI-computing technology into more industries. OpenAI is taking an ownership stake in Thrive Holdings, an investment vehicle set up earlier this year by Thrive Capital, adding to a growing list of circular deals involving the ChatGPT maker and its backers. China’s DeepSeek unveiled two new versions of an experimental artificial-intelligence model it released weeks ago, adding fresh capabilities the startup said would help with combining reasoning and executing certain actions autonomously. Strategy Inc. said it had created a $1.4 billion reserve to fund future dividend and interest payments, in a bid to temper fears that the Bitcoin accumulator may be forced to sell some of its roughly $56 billion cryptocurrency haul if token prices continue to fall. First Digital Group is planning to go public by merging with a blank-check company, as crypto firms take advantage of more favorable regulations to list their shares on stock markets. Eli Lilly & Co. is cutting the price for introductory doses of its weight-loss drug Zepbound again, as competition heats up with rival Novo Nordisk A/S. Moderna Inc. fell after the Food and Drug Administration said in a memo late last week it would place new restrictions on which vaccines hit the market. Walt Disney Co.’s Zootopia 2 pulled in $272 million to claim China’s second-biggest opening ever for a foreign film, boosting the US studio in a key market. Barrick Mining Corp. is exploring an initial public offering of its prized North American gold assets that may be worth over $60 billion as the company grapples with mining setbacks and a management shakeup. Somnigroup International Inc., the world’s largest bedding company, proposed to buy one of its biggest suppliers, Leggett & Platt Inc., in an all-stock transaction worth about $1.6 billion. Airbus SE has alerted customers that hundreds of its A320neo family jets will need to be inspected for potential structural defects linked to faulty manufacturing techniques at a supplier. BHP Group offered around £40 billion ($53 billion) in its now-aborted attempt to acquire Anglo American Plc, according to people with knowledge of the matter. A massive data breach at South Korea’s largest e-retailer Coupang Inc. caps what is set to be a record year for online leaks in the country, highlighting weaknesses in Seoul’s cyber defenses. BYD Co.’s sales fell for a third straight month as the world’s largest electric vehicle maker faces intensifying competition from rivals churning out popular models. China Vanke Co., the distressed builder that surprised markets last week when it proposed an unspecified delay in paying a local bond, has now asked holders to wait a year to be made whole, as it faces mounting liquidity pressure amid waning state support. What Bloomberg strategists say…
“After a strong comeback last week, the S&P 500 recovered its losses for November and eked out a small increase. That suggests the benchmark has now ploughed through its most turbulent period, which historically tends to bode well for December, too. In the last three decades, there have been seven other occasions when the S&P 500 has risen from September through November, and most often, went on to extend gains in December.”
— Tatiana Darie, Macro Strategist, Markets Live. For the full analysis, click here.
Some of the main moves in markets:
Stocks
The S&P 500 fell 0.5% as of 4 p.m. New York time The Nasdaq 100 fell 0.4% The Dow Jones Industrial Average fell 0.9% The MSCI World Index fell 0.5% Bloomberg Magnificent 7 Total Return Index was little changed The Russell 2000 Index fell 1.25% Currencies
The Bloomberg Dollar Spot Index was little changed The euro rose 0.1% to $1.1610 The British pound fell 0.2% to $1.3213 The Japanese yen rose 0.5% to 155.45 per dollar Cryptocurrencies
Bitcoin fell 6.2% to $85,526.64 Ether fell 8.8% to $2,757.84 Bonds
The yield on 10-year Treasuries advanced eight basis points to 4.09% Germany’s 10-year yield advanced six basis points to 2.75% Britain’s 10-year yield advanced four basis points to 4.48% The yield on 2-year Treasuries advanced five basis points to 3.53% The yield on 30-year Treasuries advanced eight basis points to 4.74% Commodities
West Texas Intermediate crude rose 1.5% to $59.45 a barrel Spot gold was little changed ©2025 Bloomberg L.P.
