US stocks are experiencing a significant downturn as selling pressure intensifies across Wall Street. The Dow Jones Industrial Average has dipped 0.6%, currently standing at 47,239, while the S&P 500 has decreased by nearly 1% and the Nasdaq 100 is down approximately 1.5%. This pullback follows a troubling decline on Thursday, marking the worst single-day drop in over a month. Tech stocks are once again at the forefront of this downturn, with Tesla’s shares falling by 4% in early trading, breaking below the $400 mark. This decline follows a 6.6% drop on Thursday, resulting in a total loss of around 10% since shareholders approved Elon Musk’s ambitious $1 trillion pay package. Nvidia also sees a decline, down another 3% after Thursday’s sell-off.
The market sentiment has worsened considerably as hopes for a December interest rate cut dwindle. Traders are now assigning less than a 50% probability to a quarter-point cut next month, a sharp decline from the 95% odds reported just a month prior. Minneapolis Federal Reserve President Neel Kashkari contributed to the bleak outlook by expressing concerns about strong economic resilience coupled with persistent inflation pressures. His remarks further exacerbate investor anxiety, particularly against a backdrop of uncertainty stemming from the six-week US government shutdown, which has created voids in crucial economic data, leaving policymakers questioning the true state of inflation and the labor market.
Global market signals are not providing relief, as data from China indicates a slowdown in economic activity. Retail sales in China rose by only 2.9% in October, the slowest rate since last year, while industrial production grew by just 4.9%, also the weakest since January. In addition, fixed-asset investment has decreased by 1.7% year-over-year. This disappointing performance has led to declines in US-listed Chinese stocks, with Alibaba down 1.6%, JD.com falling 3.4%, and XPeng experiencing a drop of 5.8%. Notably, Tesla’s rivals, Nio and BYD, are also facing losses, reflecting the fragile mood among investors, who are bracing for heightened volatility.
The cryptocurrency market is feeling the strain as well, with Bitcoin price falling below $96,000 for the first time in over six months, representing a loss of more than 20% from its peak in October. This decline reflects a broader risk-off sentiment that has emerged as Treasury yields rise and hopes for an interest rate cut fade. Analysts indicate that the cryptocurrency market has entered a confirmed bear phase, with a slowdown in exchange-traded fund (ETF) inflows and weak retail participation. Long-term holders have sold approximately 815,000 BTC, valued at nearly $79 billion, contributing to increased supply pressure in the market. Notably, the spot ETF market has struggled to absorb this pressure, experiencing a $278 million outflow recently.
Meanwhile, the economic backdrop is further complicated by a lack of clarity stemming from the lengthy US government shutdown, which has left significant gaps in economic data that are crucial for assessing inflationary trends. In Washington, President Trump is reportedly gearing up for significant tariff cuts aimed at reducing food costs, with agreements in the works involving Latin American countries such as Argentina and Brazil. This initiative comes as inflation remains a primary concern for voters ahead of the upcoming policy cycle. Investors are grappling with the dual pressures of an uncertain economic landscape and a global slowdown, leaving the markets poised for continued volatility.
