A -3% drop in US indices 2 sessions of the ‘4 witches’ preceding the confectioners’ truce is a scenario not seen since 2001.
While investors thought they would be able to carry out the final balance sheet adjustments of their portfolios over the next 48 hours with joy and joy, a huge cold shower fell on Wall Street after Jerome Powell’s comments: he underlines the robustness of growth and the presence of inflationary pressures that have not completely subsided, which would lead the FED to slow down the rate of decline in its rates.
Perhaps only 2 times -25Pts in 2025 (compared to 3 anticipated) and nervousness is likely to resurface in the coming months as each publication of the ‘PCE’ inflation index approaches.
The US indices recorded their worst session since the volatility crash at the beginning of August in Japan… but this time, it is the US ‘VIX’ which exploded by +75% towards 28 (compared to 14 on Monday, i.e. +100 % in 48 hours!).
The Nasdaq fell by -3.6% in the wake of Microstrategy -9.2% (Bitcoin lost -5% in 1 hour), Tesla which fell by -8.3%, Crowdstrike -8%, Broadcom -6 .9%, then Zscaler and Marvell -6%, Palo Alto and Intel -5.6%, Amazon -5%, Salesforce -4%, Microsoft and Meta -3.6%…
The Russell-2000, barometer of ‘Small caps’ – emblematic of ‘Trump trade’ –
took a -4.4%, the worst correction since June 2020.
The S&P500 fell by almost -3% with 482 stocks/500 in the red, the 11 sectors of activity in decline, the ‘Soxx’ semiconductor index plunged by -3.2%.
The Dow Jones (-2.55% or -1,200 Points) aligns its 10th decline and loses as much in 1 session as during the previous 6.
And to make matters worse, Micron fell -16% after closing (after -4.3% during the session, or -20% in total this 12/18).
Powell’s allusion to a more restrictive monetary policy than expected in 2025 also causes the yield of the T-Bond 2034 to soar by +14Pts towards 4.525%, the ’30 year’ lurches by +10.4Pts towards 4.683%, the ‘2 years’ does worse with +12.3 points at 4.365%.
The FOREX which had been calm this morning got excited after 9 p.m., with a surge of +1.1% in the $-Index towards 108.1 (+1% in 90 minutes): we find this variation on the E/$ parity since our currency falls below 1.0360, which pulverizes the floor of 1.0465 and opens the path to parity of 1/1 against the $.
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