Hold a wake for a failed project; a party for the dead
Canceling a project, even for the best external reasons, is particularly demoralizing to a team that has put its heart and soul into it. Hold a wake for the failed project. This should be much the flavor of an Irish wake, a party for the dead.
A project may fail for reasons that are entirely external, such as changes in market conditions. It may fail as a result of the actions taken by the team. Either way, you need to face tomorrow and the next day. It makes sense to have the wake after the low point; further bad news or ‘forensic’ discoveries can reduce the positive effect of the wake.