Market Turmoil: Stocks Slide as Government Shutdown Looms and Inflation Data Disappoints
The US stock market is bracing for another tumultuous day, with major indices pointing to significant losses. The House of Representatives’ rejection of a Trump-backed spending bill has increased the likelihood of a government shutdown this weekend, sending investors scrambling for cover. Meanwhile, key inflation data released today showed a deceleration in price increases, but still remained stubbornly high.
Tech Stocks Take a Hit
The tech-heavy Nasdaq Composite led the losses, plummeting 0.8%. The S&P 500 and Dow Jones Industrial Average also fell, by 0.3% and 0.4%, respectively. Global chip stocks were particularly hard hit, with ASML and TSMC dropping over 1% and 3%, respectively. US-based names like Nvidia, AMD, and Broadcom also came under pressure.
Bitcoin Plunges Below $95,000
The cryptocurrency market was not immune to the sell-off, with Bitcoin prices retreating below $95,000 per token. This comes amid record ETF outflows, further exacerbating the downward pressure.
Novo Nordisk Shares Plummet
In individual stock news, Novo Nordisk’s shares tanked over 20% after its obesity drug trial disappointed investors. The Danish pharmaceutical giant’s experimental obesity drug, CagriSema, failed to meet expectations in a late-stage trial, wiping out as much as $125 billion in market value.
Tesla Recalls 700,000 Vehicles
Tesla shares dropped 6% after the company recalled nearly 700,000 US vehicles over a tire pressure monitoring system defect. This is the latest in a string of recalls for the electric vehicle manufacturer.
Inflation Data: A Mixed Bag
The core Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation gauge, showed a deceleration in price increases in November. However, prices still remained sticky, with a 0.1% monthly increase and a 2.8% yearly gain. While this is lower than economist expectations, it still indicates that inflation remains a challenge for the central bank.
Fed’s Fight Against Inflation Continues
The Federal Reserve has been battling to bring inflation back down to its 2% target, and today’s data suggests that the fight is far from over. The central bank slashed interest rates by 25 basis points at its last policy meeting, but officials signaled less easing to come in 2025 with inflation expected to remain elevated over the long term.
Economic Data and Earnings
Today’s economic data also includes personal income, personal spending, and the University of Michigan consumer sentiment index. Earnings reports are due from Carnival Corporation and Winnebago.
Global Markets Under Pressure
The threat of a government shutdown, coupled with Trump’s tariff threats on Europe, has pressured global markets across the board. Investors are bracing for a volatile day ahead, with all three major averages on track for weekly losses.
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