ORLANDO / LONDON (IT BOLTWISE) – Tech stocks on Wall Street saw a significant decline after some megacap companies released their quarterly reports. At the same time, the dollar and US bond yields continued to rise after the Fed made a “hawkish” interest rate cut. Investors also digested the results of the US-China summit.
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Recent developments in the financial markets have put major pressure on tech stocks on Wall Street. Following the release of quarterly reports from some megacap companies, major US indices posted significant losses, led by the Nasdaq with a 1.6% decline. Companies such as Meta, Chipotle and eBay, which suffered double-digit losses, were particularly affected.
In parallel, the dollar and US bond yields continued to rise after the Federal Reserve made a “hawkish” interest rate cut. This decision was interpreted by markets as a signal of a possible pause in further rate cuts in December. Fed Chairman Jerome Powell stressed that the labor market problems stemmed from a supply issue rather than weak demand, calling into question the effectiveness of further rate cuts.
The summit meeting between US President Donald Trump and Chinese leader Xi Jinping brought little surprises. Despite the positive assessment of the meeting by Trump, who rated it “12 out of 10,” the hoped-for breakthrough did not materialize. Experts like Stephen Jen from Eurizon warn that the two countries are increasingly moving away from each other and building their own economic ecosystems.
In the USA, the liquidity situation on the money markets is also attracting attention. The Fed plans to end its QT program on December 1 while liquidity in money markets remains tight. The rise in the “SOFR” overnight interest rate above the upper bound of the Fed’s target range suggests tightening liquidity conditions, which could prompt the Fed to provide liquidity if needed.
The mixed results from tech giants, particularly the “Magnificent Seven,” raise questions about the sustainability of AI-driven growth. While NVIDIA recently became the first company to surpass $5 trillion, it remains unclear how its massive investments in artificial intelligence will impact its future profits. Meta’s 11% decline could be an indicator that the AI boom may be losing momentum.
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