Markets Rebound on Rate Cut Hopes; Eli Lilly Hits $1T as Crypto Tumbles
Market Snapshot
- 📈 S&P 500: 6,603 (+0.98%)
- 📈 Dow Jones Industrial Average: 46,245 (+1.08%)
- 📈 NASDAQ Composite: 22,273 (+0.88%)
- 📉 US 10-Year Treasury: 4.07% (-0.04%)
- 📈 Gold: $4,065 (+0.10%)
- 📉 Bitcoin: $85,228 (-1.53%)
- 📉 Ethereum: $2,768 (-2.19%)
US Markets Rebound on Rate Cut Speculation
US stock markets concluded a volatile week with significant overall losses, despite a strong rally on Friday. For the week, the S&P 500 and Dow Jones Industrial Average both declined by approximately 2%, while the tech-heavy Nasdaq Composite fell 2.7%. The downturn earlier in the week was fuelled by concerns over high valuations in the artificial intelligence sector and a stronger-than-expected US jobs report, which led investors to scale back bets on a December interest rate cut.
Market sentiment shifted dramatically following remarks from New York Federal Reserve President John Williams, who stated he sees "room for a further adjustment" on interest rates in the "near term." Hopes for a potential peace plan to end the Russia-Ukraine war also contributed to the positive mood. Following these developments, traders increased the probability of a December rate cut to over 70%, a significant jump from around 44% a week prior. However, Boston Fed President Susan Collins offered a more cautious view, stating she sees "reasons to be hesitant" about lower rates. Despite the headline index recovery, analysts note that underlying market weakness persists, with two-thirds of the largest 1,000 U.S. stocks remaining more than 10% below their peaks.
Corporate and Sector Highlights
Pharmaceutical Sector in Focus
Pharmaceutical company Eli Lilly became the first drugmaker to achieve a market capitalisation of over $1 trillion. The milestone is primarily attributed to the massive success of its GLP-1 weight-loss drugs, Mounjaro and Zepbound, which analysts project could become the best-selling medicines in history. The achievement highlights a broadening of market leadership beyond the technology sector.
In contrast, US-listed shares of Danish drugmaker Novo Nordisk fell more than 10% after the company announced its trial for Alzheimer's disease did not meet its main target. The trial was investigating whether semaglutide, the active ingredient in its popular drugs Ozempic and Wegovy, could slow cognitive decline.
The Shifting AI and Tech Landscape
A sell-off impacted many AI-related stocks amid concerns of a potential bubble. The high cost of GPUs has reportedly made banks hesitant to finance data centre build-outs, leading to unconventional financing arrangements. This has raised questions about the long-term sustainability of the current AI hardware market.
Amid the downturn, Alphabet's shares performed well, reportedly due to progress with its new AI model, Gemini 3, and its development of custom chips that could challenge Nvidia's dominance. This may signal a shift in AI leadership towards integrated tech giants. Elsewhere, Amazon laid off thousands of engineers in a strategic pivot towards innovation, while OpenAI introduced a group chat feature for its ChatGPT model.
Separately, social media giant Meta is facing scrutiny after a legal filing accused the company of halting internal research that allegedly found users who stopped using Facebook became less depressed and anxious.
Other Corporate News
Macquarie Asset Management has submitted a non-binding proposal to acquire Australian logistics firm Qube Holdings for an enterprise value of A$11.6 billion. In entertainment, Universal's film 'Wicked: For Good' had a record-breaking debut, earning around $150 million in domestic ticket sales. It marked the biggest ever worldwide opening for a Broadway musical adaptation, providing a significant boost to the holiday box office.
Cryptocurrency Market in Turmoil
The cryptocurrency market is enduring its worst month since the 2022 collapse. Bitcoin has fallen by approximately 25% in November, erasing nearly $400 billion in market value in a single week and pushing trader sentiment to a state of "extreme fear." The downturn has been exacerbated by significant outflows from US Bitcoin ETFs.
Analysts highlight the pressure on major corporate holders like MicroStrategy, whose strategy of issuing debt to purchase Bitcoin is now under strain. This has sparked concerns about potential forced liquidations that could add further selling pressure to the market. Despite the broad sell-off, some institutional investors, such as Cathie Wood, have reportedly been purchasing shares in crypto-related companies.
In other developments, the SEC approved Grayscale's XRP and Dogecoin ETFs for trading. The co-founder of Bitcoin mixer Samourai Wallet was sentenced to four years in prison, and a DNS hijack temporarily affected the Aerodrome and Velodrome decentralised exchanges.
Economic and Policy Developments
US consumer sentiment dropped to near-record lows in November, as households expressed persistent fears about high prices and potential job losses. The sentiment has put pressure on the White House to address the economy's affordability crisis. A debate also continues within the Federal Reserve on monetary policy, with some arguing for a rules-based approach that would suggest significantly higher interest rates are needed to combat inflation, in contrast to the Fed's current data-dependent strategy.
On the global front, defence stocks like Lockheed Martin and RTX declined amid the general market weakness and talk of a potential Russia-Ukraine peace plan. The US government is increasing investment in rare earth mineral companies to reduce its dependence on China. In a move to ease food inflation, the Trump administration has removed 40% tariffs on some Brazilian food imports. Separately, Singapore's consumer price index for October rose 1.2% year-on-year, exceeding expectations.
In a significant policy move, the Trump administration announced a controversial plan to expand offshore oil and gas leasing in protected areas, sparking a debate between energy independence advocates and environmental groups.
Social and Sector Trends
The US elder care industry is experiencing a surge in investor interest, driven by the nation's ageing population. Despite a severe staffing crisis, the high demand for care has created significant opportunities, with senior-housing REITs like Welltower and skilled nursing operators seeing strong stock performance.
Meanwhile, air travel in the US over the Thanksgiving holiday is projected to be the busiest in 15 years, with airlines expecting to service more than 31 million people. Travellers are being advised to expect delays, as a major winter storm system threatens to cause further disruption.
NOTE: This content is for informational and educational purposes only and does not constitute financial advice. Always do your own research. Not financial advice (NFA).