US stocks showed signs of recovery following a sharp decline on Wall Street, which marked the steepest sell-off in over a month. The sell-off was largely attributed to diminishing confidence in the prospect of an interest rate cut in December, particularly in the wake of the longest government shutdown in US history.
The Dow Jones Industrial Average slipped roughly 0.8%, while the S&P 500 managed to stabilize around the flatline, with the Nasdaq Composite even dipping into positive territory at one point. On Thursday, major indexes had their most significant one-day losses in over a month, igniting concerns in the market.
Tech stocks, which had faced considerable pressure, saw somewhat of a recovery in the mid-morning hours on Friday. Investor sentiment shifted as fears around artificial intelligence led many to rotate away from riskier assets and toward sectors perceived as having more stable valuations. Notably, Tesla shares remained volatile, breaking below the $400 mark before eventually recovering. Nvidia’s stock also demonstrated resilience, bouncing back into positive territory after earlier declines.
Meanwhile, Bitcoin fell below $96,000, sinking over 20% from its peak in October, which underscored the bearish sentiment pervasive in the crypto market. Traders expressed growing concerns that the Federal Reserve may slow down its policy easing following a recent shift toward a more hawkish tone from officials within the central bank. As recently as a month ago, traders had estimated nearly a 95% chance of a quarter-point rate cut next month, but that probability has now dropped to under 50%.
Minneapolis Fed President Neel Kashkari has highlighted the “resilience” in the US economy while continuing to express concerns about inflation, further complicating the outlook for interest rates. Analysts remain uncertain about upcoming economic data points that will be released now that the government has reopened.
In a related move to address rising consumer prices, President Trump is reportedly preparing to implement significant tariff cuts aimed at reducing high food costs. This initiative includes several trade agreements with Latin American countries, designed to lower prices on staples such as bananas and coffee—issues that have resonated with voters in recent local elections.
On the corporate front, notable shifts came from American Bitcoin, whose stock plummeted by 13% ahead of the market’s open despite the company reporting a profit more than doubling in the third quarter. The company, linked to the Trump family, faces market skepticism as its stock shows instability.
Walmart’s shares fell by 2.5% in premarket trading following the announcement that CEO Doug McMillon will retire at the end of January. John Furner, the head of US operations, has been named as his successor.
In China, economic data indicated a slowdown, with retail sales growing by only 2.9% year-over-year, the slowest pace since last year. This was further reflected in industrial production, which rose by 4.9%, its smallest gain since January, and a reported decrease in investment in fixed assets. Disappointing data from China has affected US-listed Chinese stocks, contributing to market woes.
As investors braced for another potential downturn, Tesla shares dropped further, losing 4% in premarket trading. This follows Tesla’s worst day since July, where its stock closed down by 6.6%. Other tech giants like Oracle have also felt the impact, as concerns about its heavy investments in AI have weighed heavily on its stock price.
Amid these market challenges, gold prices have surged due to increasing demand for safe-haven assets, driven by the instability caused by the government shutdown and market volatility. Investors are seeking refuge in gold, which has seen a resurgence after a period of declining prices.
