The last thing I wanted to see has still happened
Source: Wall Street Intelligence Circle
The optimistic scenario has been brutally torn apart.
After the close on Tuesday, the last thing anyone wanted to see happened:
- U.S. stock markets fell across the board, with the Nasdaq dropping more than 1%;
- Gold prices once fell below $4100 during trading, barely closing above this level;
- Oil prices rose, with U.S. crude surpassing $70;
- The dollar rebounded to above 101;
- The 10-year U.S. Treasury yield soared to 4.55%.
First, Tuesday was not just a "down day." Multiple key price points were triggered simultaneously: analysts were closely watching the dollar at 101, gold at $4100, and U.S. crude oil at $70.
Second, the drop in U.S. stocks does not match the current environment, and the potential risk of further decline should be noted. For example, the Nasdaq fell right from the opening, even though there was no particular news at that time, and the Nasdaq's decline once again outpaced the Dow. External shocks merely opened the door, but it's the internal cracks within AI trading that are really causing the door to loosen.
U.S. stocks currently face two layers of pressure:
The first layer is internal pressure: cooling expectations for AI capital expenditures, and an exodus from high-valuation growth stocks.
The second layer is external pressure: rising oil prices, higher yields, and a rebounding dollar.
Third, the direct cause of the market decline is that the U.S. has begun a series of strikes against Iran, while revoking the waivers that allowed Iran to sell oil globally. This has caused oil prices to surge and gold to plunge. Iran stated that the U.S. military action and the withdrawal of waivers violate the agreements reached by both sides. Iranian Deputy Foreign Minister Kazem Gharibabadi vowed to take "decisive action" in response.
The importance is not in “the U.S. attacks Iran again,” but that this event has interrupted the optimistic scenario the market had just started to build.
Previously, the market was trading on weak non-farm payrolls, a declining dollar, falling odds of rate hikes, low oil prices, and a simultaneous recovery in gold and stocks.
Now, it has suddenly become: oil prices rising, the dollar rebounding, 10-year Treasury yields spiking to 4.55%, gold falling below $4100 at one point, and Nasdaq leading the declines.
The market is again concerned—will the energy shock reignite inflation, preventing the Federal Reserve from easing policy? This is not simply a gain or drop, but rather "geopolitical risk being priced into inflation again."
The market will likely lean defensive on Wednesday, and any rebound will be fragile. If Iran really takes "decisive action," such as attacking ships, ports, energy facilities again, or threatening Hormuz Strait passage, oil prices will become the central variable for the entire market. By then, pressure on U.S. stocks will continue to expand, with the Nasdaq remaining the most vulnerable.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Wall Street giants collectively raise rate hike forecasts, US Treasury futures continue to fall, gold drops over 1% to break 4000
After the US October CPI exceeded expectations, Goldman Sachs and Nomura added a forecast for an interest rate hike in March next year, while Deutsche Bank included a forecast for a rate hike in January next year. Currently, the market has fully priced in a 25 basis point rate hike in December, with a 13% probability for a 50 basis point hike. On Wednesday, the US Treasury spot market was closed, but Treasury futures continued to fall, with corresponding yields rising by about 2 to 4 basis points, and spot gold came under pressure, dropping by 1.1%.
No Need to Worry About the Cooling Down of AI Data Center Construction? The US Import Boom Is Unlikely to Subside in the Short Term, Real Impact May Come in 2029
It takes an average of 4.8 years from finalizing investment to starting construction of a data center project, and an additional 2.6 years from construction start to becoming operational. Servers usually cannot be installed until after the building structure and racks are completed. For trade partners such as Taiwan (China), South Korea, and Mexico who rely on US data center supply chain demand, the inertia in construction timelines provides at least a one- to two-year buffer for future exports.
Federal Reserve Major Debate: When Should the Tenure of “Number Three” Williams End?
The main point of contention is whether Williams should step down in June 2028, upon completing a full 10-year term, or in June 2027, when he reaches the mandatory retirement age of 65. Analysts point out that the Federal Reserve Board holds ultimate discretion; if he leaves early, Fed Chair Waller would be able to assert greater control over the appointment to this critical position. However, forcing Williams to shorten his term could easily be interpreted as political manipulation. Williams himself is expected to serve until June 2028.
Crypto prices
More
