Stocks Slide Amid Fed Rate-Cut Hesitation and Market Uncertainty
Global stock markets faced declines as Federal Reserve Chair Jerome Powell signaled no urgency to reduce interest rates. Additionally, investor unease grew over President-elect Donald Trump’s cabinet appointments, further dampening sentiment.
European Markets Under Pressure
Europe’s Stoxx 600 index fell 0.3%, marking its fourth consecutive weekly drop. Pharmaceutical stocks were among the hardest hit after Trump appointed a prominent vaccine skeptic to a key health-policy role. Shares of vaccine makers Sanofi, GSK Plc, and AstraZeneca Plc declined in response to the controversial move.
U.S. Markets Extend Losses
U.S. equity futures signaled another day of declines, with Nasdaq 100 futures falling 0.9%. Drugmakers Moderna Inc., Novavax Inc., and BioNTech SE saw notable premarket losses. However, Domino’s Pizza Inc. bucked the trend, climbing after Berkshire Hathaway Inc. revealed a stake in the restaurant chain.
The S&P 500 has now lost approximately one-third of its post-election gains as optimism over corporate growth under Trump wanes. The shift in sentiment comes alongside concerns over slower-than-expected interest rate cuts. Persistently high inflation and Powell’s cautious tone on monetary easing have reshaped market expectations.
Rate-Cut Odds and Treasury Yields
Powell’s comments reduced the probability of a December rate cut to below 60%, down from 80% the previous day. Treasury yields steadied after rising sharply in response to the Fed’s higher-for-longer interest rate outlook.
Mathieu Racheter, head of equity strategy at Julius Baer Group, noted that markets are adjusting to the revised rate-cut trajectory. However, he added, “Some controversial cabinet announcements obviously do not help the market.”
The Dollar and Bitcoin React
The U.S. dollar remained strong, supported by the Fed’s stance, although it stayed below recent two-year highs. The greenback is poised for its seventh consecutive weekly gain, with more clarity expected following U.S. retail sales data and speeches from Fed officials later in the day.
Bitcoin, another asset tied to so-called “Trump trades,” also pulled back after hitting a record $93,000 earlier this week. Market enthusiasm around potential crypto-friendly policies from the new administration appears to be cooling.
“Much of the good news is already priced into Bitcoin,” said Jochen Stanzl, Chief Market Analyst at CMC Markets. “Without concrete political steps from the Trump administration, we may see a broader correction in this and other Trump-related trades.”
Outlook
As markets navigate shifting monetary policy expectations and political developments, investors are bracing for further volatility. Upcoming economic data and Fed commentary will play a critical role in shaping sentiment in the coming weeks.
Source : Swifteradio.com
