Market: huge cold shower on Wall Street

(CercleFinance.com) - A -3% drop in US indices 2 sessions before the '4 Witches' Christmas break is a scenario unseen since 2001.


Just when investors thought they'd be able to make the final balance sheet adjustments to their portfolios in the next 48 hours, a huge cold shower fell on Wall Street after Jerome Powell's comments: he emphasized the robustness of growth and the presence of inflationary pressures that have not been completely extinguished, which would lead the FED to slow the pace of rate cuts.

Perhaps only 2 times -25Pts in 2025 (compared with 3 anticipated), and nervousness is likely to resurface in the coming months as each release of the PCE inflation index approaches.

The US indices record their worst session since the volatility crash in Japan at the beginning of August... but this time, it was the US 'VIX' that exploded by +75% to 28 (versus 14 on Monday, i.e. +100% in 48H!).

The Nasdaq is down -3.6% in the wake of Microstrategy -9.2% (Bitcoin lost -5% in 1 hour), Tesla -8.3%, Crowdstrike -8%, Broadcom -6.9%, then Zscaler and Marvell -6%, Palo Alto and Intel -5.6%, Amazon -5%, Salesforce -4%, Microsoft and Meta -3.6%....

The Russell-2000, a barometer of 'small caps'-emblematic of the 'Trump trade'-
is down -4.4%, the worst correction since June 2020.

The S&P500 is down -3%, with 482/500 stocks in the red, all 11 sectors down, and the Soxx semiconductor index is down -3.2%.

The Dow Jones (-2.55% or -1,200pts) is down for the 10th time, losing as much in 1 session as it did in the previous 6.

And to make matters worse, Micron was down -16% after the close (after -4.3% during the session, i.e. -20% overall this 18/12).

Powell's hint of a tighter-than-expected monetary policy in 2025 also sent the yield on the T-Bond 2034 soaring by +14pts to 4.525%, the '30-yr' lurching by +10.4pts to 4.683%, and the '2-yr' doing worse with +12.3pts to 4.365%.

The FOREX, which had been calm this morning, got carried away after 9 p.m., with the '$-Index' surging +1.1% to 108.1 (+1% in 90 minutes): this variation can be seen on the E/$ parity, as our currency fell back below 1.0360, shattering the 1.0465 floor and opening the way to the 1/1 parity against the $.

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