US STOCKS-Wall Street ends down as megacaps give back gains

(For a Reuters live blog on U.S., UK and European stock markets, click or type LIVE/ in a news window.) * Alaska Air drops on Hawaiian Holdings buyout deal * Crypto stocks surge on bitcoin rally (Updates with closing prices) By Noel Randewich and Shristi Achar A Dec 4 (Reuters) - U.S. stocks ended lower on Monday, interrupting last week's rally, as investors turned cautious ahead of employment data due this week that could alter expectations that the Federal Reserve will cut interest rates early next year.

(For a Reuters live blog on U.S., UK and European stock markets, click or type LIVE/ in a news window.) *

Alaska Air drops on Hawaiian Holdings buyout deal *

Crypto stocks surge on bitcoin rally (Updates with closing prices)

By Noel Randewich and Shristi Achar A Dec 4 (Reuters) -

U.S. stocks ended lower on Monday, interrupting last week's rally, as investors turned cautious ahead of employment data due this week that could alter expectations that the Federal Reserve will cut interest rates early next year. The S&P 500 receded, with megacaps Microsoft, Apple , Nvidia and Amazon pressured by higher U.S. Treasury yields, which made returns on stocks less attractive.

Wall Street has rallied in recent weeks, buoyed by robust corporate earnings and expectations that the Fed will start cutting rates as soon as March. The S&P 500 registered its highest close of the year on Friday as remarks from Fed Chair Jerome Powell acknowledged the central bank's need to "move forward carefully" amid signs of economic softening, comments that bolstered expectations the Fed has finished raising rates.

Small-cap stocks rose on Monday, with the Russell 2000 rallying and bringing its gain this year to over 6%. "There is a lot of chop around here that is not necessarily meaningful," said Tom Martin, a senior portfolio manager at GLOBALT Investments in Atlanta.

"We have a really important Fed meeting coming up, and what makes it important is that all of a sudden, the market has decided that they're going to cut early next year." Unofficially, the S&P 500 declined 0.54% to end the session at 4,569.78 points. The Nasdaq declined 0.84% to 14,185.49 points, while Dow Jones Industrial Average declined 0.11% to 36,204.31 points.

Ride-hailing service Uber Technologies rallied after an announcement on Friday it will join the S&P 500 effective Dec. 18. Shares of Alaska Air Group tumbled after the carrier said on Sunday it would acquire peer Hawaiian Holdings for $1.9 billion, including debt. Hawaiian's shares nearly tripled in value, helping lift the Russel index.

This week's main macroeconomic focus will be Friday's jobs report for November, which may help investors gauge the Fed's likely interest rate path, as well as the potential for a "soft landing" - where the Fed manages to bring inflation under control while averting a recession. Traders widely expect the central bank will keep rates unchanged at its meeting next week. Interest rate futures suggest a 58% probability the Fed will start cutting rates by March 2024, according to the CME Group's FedWatch tool.

However, some analysts warn that markets have been too quick to price in lower interest rates. Adding to declines on Monday were renewed fears about a widening of the war in Israel and Gaza after an attack on three commercial vessels in the southern Red Sea.

Shares of cryptocurrency firms such as Coinbase Global , Riot Platforms and Marathon Digital rallied after bitcoin crossed $40,000 for the first time this year.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)