A decline in US Stock Markets Amid Economic Expectations: The US stock market indices saw a significant decline
amidst growing speculation that the market exceeded logical limits following the US elections,
diminishing bets on the Federal Reserve’s continued rate cuts.
Content
Loss of Momentum in Stocks
Treasury and Dollar Performance
Analysts’ Market Views
Fed Expectations and Inflation Impact
Divergence in Major Indices
Expert Opinions
Inflation and Economic Policies
Loss of Momentum in Stocks
Stocks lost momentum in the final hours of trading in New York,
with the S&P 500 index nearing erasure of gains achieved partially due to inflation data that met expectations.
Despite Cisco Systems‘ optimistic outlook for the current period,
its cautious annual forecast did not have much impact on investor response.
Treasury and Dollar Performance
Short-term Treasury bonds outperformed,
with the yield on two-year bonds dropping from its highest level since July.
The probability of a rate cut in the December 18 meeting rose to around 80%.
The dollar remained at a two-year high, while Bitcoin pared its gains after surpassing $93,000 earlier.
Analysts’ Market Views
Brett Kenwell of eToro noted that the markets have risen since the elections,
solidifying a mindset of buying on dips.
He pointed out that potential short-term selling may be limited as fund managers seek to improve performance by year-end.
Fed Expectations and Inflation Impact
Consumer Price Index data emphasized the ongoing uncertainty
among Federal Reserve officials regarding the extent of needed rate cuts,
reflecting the policymaking challenges.
Divergence in Major Indices
While the S&P 500 index showed little change,
the Nasdaq 100 fell by 0.2%, and the Dow Jones Industrial Average rose by 0.1%.
Ten-year Treasury yields increased by two basis points to 4.45%.
Expert Opinions
Seema Shah of Principal Asset Management believes stronger-than-expected
inflation may lead to steady rates at the next meeting.
Other analysts noted that high inflation continues to influence economic policies,
posing challenges to easing monetary efforts.
Inflation and Economic Policies
Ellen Zentner of Morgan Stanley suggested that markets
are currently pricing in a lower probability of rate cuts than previously expected,
with the possibility of the Fed pausing in January.
Jeffrey Roach noted that persistent inflation components could allow for a December rate cut, with a potential pause in January.
Future Market Movements
Citi Group analysts highlighted that the focus has shifted to Nvidia’s upcoming earnings report,
which is seen as a major market event.
This illustrates the contrast between concerns over macroeconomic data and the emphasis on the tech sector.
A Decline in US Stock Markets Amid Economic Expectations