Fed Rate Cut. The US stock market took a nosedive on Wednesday, ending a nine-day rally, as confusion over the Fed’s stance on interest rate cuts rattled investors. The S&P 500 and Nasdaq 100 both dropped 1.5%, while the Dow Jones plunged 475 points. However, the market also witnessed some surprising positive economic data, such as a jump in existing home sales and a shrinkage of the US current account deficit. In this article, we will explore the main drivers of the market’s swings and spotlight some key developments in the corporate and economic scene.
What’s Behind the Fed’s Mixed Signals?
The sudden halt to the nine-day surge was sparked by conflicting comments from Fed officials after the central bank hinted at possible interest rate cuts in the next year. While the Fed indicated a potential for rate cuts, some policymakers, such as NY Fed President Williams and Atlanta Fed President Raphael Bostic, expressed divergent views, creating doubt among investors.
How to Benefit from the Economic Data Surprises?
Despite the market slump, fresh economic data exceeded expectations. Existing home sales in the US rose by 0.8% month-over-month in November, bouncing back from the lowest level since August 2010. The National Association of Realtors forecasts a substantial rise in existing-home sales for 2024, along with stable median home prices, improving affordability for prospective buyers.
Why the US Current Account Deficit Matters?
The US current account deficit narrowed by 7.6% to $200.3 billion in Q3 of 2023, the smallest gap since Q2 2021. The decrease was mainly driven by a lower deficit in goods, with exports, especially in petroleum and related products, soaring. However, the secondary income deficit increased, reflecting a drop in general government transfers.
Which Corporate Moves Should You Watch Out For?
The stock value of Alphabet rose by 1.2% after it revealed plans to restructure its large ad sales unit. Which employs 30,000 people. FedEx’s stock, on the other hand, fell by 12% after it announced disappointing quarterly results and a lower revenue forecast. This was a major setback for the company.
What’s the Market Focus and Outlook?
The yield on the US 10-year Treasury note fell below 3.9%, reaching its lowest level since July 26th. As traders speculated on possible Fed rate cuts in the next year. The market is closely watching upcoming events, such as Treasury bill auctions and the release of PCE inflation data.
How to Capitalize on the Housing Market Resilience?
The US housing market was volatile, but also strong. Existing home sales rose and the median home price stayed stable. The outlook for homebuyers improved as the Mortgage Bankers Association announced a big drop in the interest rate for 30-year fixed-rate mortgages.
What’s Happening in the Eurozone Markets and Consumer Confidence?
In the Eurozone, stocks closed flat as markets continued to evaluate the direction of monetary policy for the ECB and the Fed. Consumer confidence in the Euro Area rose, reflecting optimism about possible interest rate reductions. European corporate movements included Flutter Entertainment’s gains and declines in Airbus, Safran, and SAP shares.
How to Trade in the Cryptocurrency Market?
Bitcoin and Ether experienced positive momentum, with Bitcoin leading the way with a 3.43% gain. Highlighting the ongoing interest and volatility in the cryptocurrency market.
Bitcoin Buy long signal @44700:
The US market’s sharp downturn, fueled by mixed signals on interest rate cuts, was accompanied by positive economic data and notable corporate moves. The housing market displayed resilience, and the Eurozone saw a mix of market flatness and rising consumer confidence. As the market awaits key economic indicators and corporate developments, investors continue to navigate a landscape marked by uncertainty.