US Stocks Open Slightly Higher, Bitcoin Plunges Over $3,500, Market Expectations for December Rate Cut Rise

US Stocks Open Slightly Higher, Bitcoin Plunges Over $3,500, Market Expectations for December Rate Cut RiseMarketsUS stocks opened slightly higher on November 14, with the Dow Jones Industrial Average up 0.10%, the Nasdaq Composite up 0

US Stocks Open Slightly Higher, Bitcoin Plunges Over $3,500, Market Expectations for December Rate Cut Rise

Markets

US stocks opened slightly higher on November 14, with the Dow Jones Industrial Average up 0.10%, the Nasdaq Composite up 0.13%, and the S&P 500 up 0.07%.

Individual Stocks

• ASML Holding shares rose nearly 5% after the semiconductor equipment manufacturer said it expects sales to grow between 8% and 14% in the next five years, driven by continued booming demand for semiconductors for AI development. ASML expects sales of 44 billion to 46 billion in 2030, with a gross margin of 56% to 60%, maintaining its previous optimistic forecast. CEO Peter Wennink stated that approximately 40% of the chip business will revolve around AI by 2030.

• Disney shares rose over 7% after its fourth-quarter earnings beat expectations. The company reported revenue of $22.57 billion, a 6.3% year-over-year increase, beating estimates of $22.47 billion. Adjusted earnings per share were $1.14, exceeding analysts' expectations of $1.10.

• NetEase shares gained over 6%, bucking the trend of most Chinese ADRs, after reporting a 5% quarter-over-quarter increase in Q3 net revenue from its game business, which reached RMB 20.2 billion.

Cryptocurrency

Bitcoin plummeted over $3,500 in just 30 minutes, dropping from $91,846.1 to $88,289 at one point, marking a decline of over $5,000 from its all-time high. Data from Coinglass revealed that nearly 200,000 users across the cryptocurrency market experienced liquidation in the past 24 hours.

Macroeconomic Data

• The US Producer Price Index (PPI) rose 2.4% year-over-year in October, exceeding forecasts of 2.3% and up from 1.8% the previous month. The PPI also rose 0.2% month-over-month, as expected, following a 0.2% increase in September.

• Initial jobless claims in the US fell to 217,000 last week, beating expectations of 220,000 and down from 221,000 the previous week. The data release saw the US dollar briefly spike before trading sideways. US Treasury yields initially rose, with the 10-year yield briefly touching a record high of 4.478%, but then quickly retreated and turned negative.

• Following the data release, the market's expectation of a December rate cut increased significantly to over 80%, from under 60% just two days prior.

Federal Reserve

Several Federal Reserve officials have urged caution. For example, Federal Reserve Governor Adrian Kugler said on Thursday that rate cuts should be paused if inflation progress stalls. Federal Reserve Chair Jerome Powell is scheduled to speak later in the day. Goldman Sachs expects the final rate level in this Fed rate-cutting cycle to exceed the traditional neutral range, potentially settling between 3.25% and 3.5%, which means that even after a round of rate cuts, the interest rate level will still be 100 basis points higher than the peak of the previous cycle.

Other Economic Data

• The US Bureau of Labor Statistics reported that the seasonally adjusted PPI rose 0.2% month-over-month in October, following increases of 0.1% and 0.2% in September and August, respectively. The PPI rose 2.4% year-over-year in October. The report showed that October's PPI increase was mainly driven by rising prices for final demand services.

• The US Department of Labor reported that initial jobless claims fell to their lowest level since May, suggesting a stabilization in the labor market as impacts from recent hurricanes and strikes gradually fade. The data shows that initial jobless claims fell to 217,000 last week, beating expectations of 220,000 and down from 221,000 the previous week. Jobless claims have been volatile in recent weeks due to recovery efforts in several southeastern states after Hurricane Idalia and the end of a multi-week strike by Boeing workers. Current jobless claims are below the average for the past two years. The four-week moving average of new jobless claims, a less volatile indicator, also fell to 221,000, the lowest level since May. Additionally, the number of continuing claims, which represent those receiving unemployment benefits, fell to 1.87 million in the week ending October 2.

Interest Rates and Monetary Policy

Last week, the Federal Reserve lowered interest rates by 0.25 percentage points, partly to help maintain the strength of the labor market. Federal Reserve President of the New York Fed, John C. Williams, said on Thursday that weekly credit card spending could provide a good indication of the direction of spending, and current jobless claims are an important indicator for observing changes in the labor market. The best inflation data is government data such as the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE).

Other Market News

• US Dollar Index continued its rally, briefly crossing the 107 mark and holding near its highest level in two years. Analysts attribute the dollar's strength to strong US economic data and expectations of continued Fed rate hikes.

• Markets have significantly increased their expectations for a December rate cut, now exceeding 80%, from less than 60% just two days ago. This reflects a significant shift in investor expectations regarding the future direction of the Fed's monetary policy.

• Precious Metal Prices declined. Spot gold fell 0.38% to $2,563.310 per ounce, while spot silver dropped 0.16% to $30.244 per ounce.

• StoneX Analyst Fawad stated that the weakness in precious metals reflects the possibility of restrictive US monetary policy under Trump in 2025, which would increase the cost of holding non-yielding assets such as gold. Fawad pointed out that the hawkish repricing of US interest rates after Trump's victory has supported the dollar and yields, weakening the dollar-denominated gold. Gold prices are also falling as investors digest geopolitical risks. Fawad added that the short-term outlook remains bearish until a bullish reversal occurs, although the potential for further declines may be limited.

Key Takeaways

• US stocks opened slightly higher on Thursday, but the market was weighed down by concerns about global economic growth and a potential recession.

• Bitcoin's plunge raised concerns about the cryptocurrency market's stability.

• The market's expectations for a December rate cut have increased significantly, suggesting that investors are betting on the Fed easing monetary policy.

• The US dollar continues to strengthen, supported by strong economic data and expectations of continued Fed rate hikes.

• Precious metal prices fell as investors sought out safe-haven assets.

• Overall, the market is still grappling with uncertainty about the future direction of the global economy and the Fed's monetary policy.