Stock Losses Deepen as Fed Fears Unsettle Traders: Markets Wrap
(Bloomberg) — The selloff in US stocks extended into Friday as fears of a hawkish pivot by the Federal Reserve fueled a retreat from risky assets. UK markets slid amid fresh uncertainty over Britain’s fiscal outlook.
Technology stocks were set to be at the forefront of the decline again, with Nasdaq 100 futures slipping 0.5%. The gauge tumbled more than 2% in the previous session as mounting doubts over an interest-rate cut next month stirred fresh jitters about stretched valuations. Bitcoin sank to a six-month low. The S&P 500 was on course for its first back-to-back weekly loss since June.
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UK gilts sold off after Chancellor of the Exchequer Rachel Reeves scrapped plans to raise income tax rates in the coming budget, prompting questions over how she would offset the revenue shortfall.
The move eased after people familiar said the decision reflected improved economic forecasts, though 10-year yields remained 8 basis points higher at 4.52%. The pound erased November’s gains while the FTSE 100 headed for its biggest drop since April.
Traders slashed the odds of a December US rate cut to below 50% after a string of Fed officials voiced skepticism about the need for a third straight move, citing the economy’s resilience and lingering uncertainty over inflation. The question remains how the majority of policymakers are leaning, with several still uneasy about signs of labor-market weakness.
Money markets had all but priced in a quarter-point reduction less than a month ago. Attention now turns to comments from three Fed officials due to speak Friday, including voting member Jeffrey Schmid. Traders also await a schedule for the release of economic data delayed by the US shutdown.
Meanwhile, strategists pointed to data showing economic activity in China cooled more than expected at the start of the fourth quarter, with an unprecedented slump in investment and slower industrial growth adding to the cautious tone.
“The nervousness is palpable on markets and it stems from different corners,” said Arnaud Girod, head of economics and cross-asset strategy at Kepler Cheuvreux in Paris. “Any pushback from the Fed on interest rate cuts is bad news. If the Fed hasn’t enough data, they are likely not to cut.”
Stocks tied to the artificial-intelligence trade, which propelled the S&P 500 to record highs this year, extended losses in premarket trading. Chip-equipment maker Applied Materials Inc. fell 5% after reporting a sales decline. Nvidia Corp. slipped about 1%, while Tesla Inc. was on track for a fourth straight day of losses. The Cboe Volatility Index climbed above 21.
A rotation from tech into more defensive stocks has helped the S&P 500 limit losses to just over 2% since its last record high toward the end of October, while the Nasdaq 100 has dropped nearly twice as much.
“We’ve seen tech stocks suffer the biggest repercussions each time there’s been a setback, and that’s because they trade at the frothiest valuations,” said Aneeka Gupta, director of macro research at Wisdom Tree UK. “Whenever there are question marks on whether there is a higher probability of a hawkish Fed stance, the segments that get hit the most are the highest duration ones.”
Corporate News:
Warner Bros Discovery Inc. rose more than 3% in premarket trading after the Wall Street Journal reported that Paramount, Comcast Corp. and Netflix Inc. are preparing bids for the company. BHP Group Ltd. is partly liable to compensate hundreds of thousands of victims of a devastating dam collapse in Brazil, a London judge ruled, moving closer to a potential multi billion dollar payout a decade after the disaster. Siemens Energy AG substantially raised its mid-term financial targets on strong demand for gas turbines and data center equipment as well as restructuring progress at its Gamesa wind turbine unit. The shares jumped. Spain’s Banco Santander SA pulled funding commitments from Gunvor Group after the US Treasury described the commodity trader as “the Kremlin’s puppet” in a social media post last week, according to people familiar with the matter. Citigroup Inc. is growing “rapidly” in China with reviving interest from investors and companies in the world’s second largest economy, according to the bank’s chief executive officer. Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 1.1% as of 10:50 a.m. London time S&P 500 futures fell 0.2% Nasdaq 100 futures fell 0.5% Futures on the Dow Jones Industrial Average fell 0.2% The MSCI Asia Pacific Index fell 1.6% The MSCI Emerging Markets Index fell 1.7% Currencies
The Bloomberg Dollar Spot Index rose 0.1% The euro fell 0.1% to $1.1618 The Japanese yen was little changed at 154.70 per dollar The offshore yuan was little changed at 7.0990 per dollar The British pound fell 0.3% to $1.3147 Cryptocurrencies
Bitcoin fell 1.7% to $97,105.54 Ether rose 0.4% to $3,189.58 Bonds
The yield on 10-year Treasuries was little changed at 4.13% Germany’s 10-year yield advanced two basis points to 2.70% Britain’s 10-year yield advanced eight basis points to 4.52% Commodities
Brent crude rose 2.4% to $64.52 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.
–With assistance from Neil Campling, Sujata Rao and James Hirai.
©2025 Bloomberg L.P.
