U.S. stocks fell on Monday as investors look to an upcoming Federal Reserve meeting later this week. The central bank is widely expected to announce another interest rate hike, but market participants are particularly interested in its commentary on potential future increases and the current state of rate-sensitive markets like housing.
Today's stock market
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The declines were broad-based, but oil stocks set the pace for today's losers, and the SPDR Oil & Gas Exploration and Production ETF (NYSEMKT:XOP) dropped 3%. Healthcare stocks also fell hard, with the Health Care Select Sector SPDR ETF (NYSEMKT:XLV) down 2% after a federal judge in Texas ruled on Friday that the Affordable Care Act is unconstitutional for its mandate requiring people purchase health insurance.
As for individual stocks, Best Buy (NYSE:BBY) sank in the wake a negative analyst note, while Jack in the Box (NASDAQ:JACK) managed to close in the green after the fast-food specialist announced a potential sale.
A word of caution on Best Buy
Shares of Best Buy fell 5.7% after Bank of America Merrill Lynch analyst Curtis Nagle downgraded the electronics retailer from neutral to underperform. Nagle also reduced his per-share price target to $50 from $70, or a 9.7% discount from Friday's close.
To justify his relative bearishness, Nagle cited credit and debit card data collected by Bank of America indicating spending on consumer electronics and toys declined 6.3% in November. And though he admits this could certainly represent a temporary lull in spending ahead of a busier December, Nagle fears Best Buy may fail to meet Wall Street's consensus estimates for comparable-store sales growth of 1.5% in the fourth quarter.
Of course, barring a preliminary release in the coming weeks, investors will need to wait until Best Buy formally announces fourth-quarter results in early March to see whether this caution is merited.
Jack in the Box explores its options
Shares of Jack in the Box climbed as much as 7% early in the session, then settled to close up 2.1% after the company announced it's "exploring strategic and financing alternatives to maximize shareholder value." Those alternatives could include a sale of the company, or executing on previously announced plans to increase its leverage.
On the former, Jack in the Box revealed it has already held discussions with potential buyers, though it cautioned there is no guarantee that a deal will be struck. And on the latter, if the company can't secure a palatable transaction, it will almost certainly move forward with its plan to put a new capital structure in place by the first half of fiscal 2019.
To be fair, this shouldn't be entirely surprising. Many investors have speculated the Jack in the Box might sell itself amid a recent revolt from franchisees over its alleged failure to make promised building repairs and its apparent lack of a "cohesive brand strategy."