US stocks plummeted in the afternoon, with SPDR S&P 500 experiencing its largest decline in nearly three months. The Nasdaq ended its nine-day winning streak. UK inflation slowed down, and UK bonds surged.

In the second half of this week, before the release of the heavyweight economic data GDP and PPI, the major US stock indexes, which had previously reached or approached historical highs, experienced a significant decline, reflecting the increased risk of a pullback under the rising expectation of a Fed rate cut.

Before the midday decline in the US stock market, the market's expectation of a rate cut by the Fed in March next year reached a new high in this cycle.

The unexpectedly MoM increase of 0.8% in the annualized number of existing home sales announced in the morning, which deviated from the low point since 2010 set in October, and the consecutive increase in the US Conference Board Consumer Confidence Index for December, which exceeded expectations and rose to a five-month high of 110.7, with a MoM increase of 9.7, the largest since the beginning of 2021.

After the release of economic data that added to the soft landing of the US economy, the major US stock indexes initially rose, but all fell sharply at midday, marking the worst daily performance in at least two months. Logistics giant FedEx, seen as a barometer of the economy, saw its stock price plummet by double digits, leading the decline in the S&P 500 constituents. Its latest quarterly performance was disappointing and its full-year sales guidance was affected by weak demand, sounding the alarm for consumer weakness. Google, which is rumored to be restructuring its advertising sales business, rose against the trend and performed the best among the S&P 500 constituents, but other blue-chip technology stocks such as Tesla and Apple fell during the day, and the Nasdaq failed to maintain its upward trend of the past week.

UK inflation cooled down significantly, with the YoY growth rate of CPI in November slowing down to a more than two-year low of 3.9%, lower than expected. Investors increased their bets on a shift in the Bank of England's stance, with expectations of a total rate cut of up to 145 basis points next year. Market pricing fully reflects five rate cuts, driving up prices and widening the decline in yields in European and American government bonds, with the decline in UK bond yields leading the way.

After the release of UK CPI, UK stocks rose; UK bond yields plunged more than 10 basis points during the day; the benchmark 10-year German bond yield fell below 2.0% for the first time since March; the benchmark 10-year US Treasury yield, which broke through 4.0% after the Fed signaled a rate cut last week, further fell to its lowest level since July; the British pound retreated from its two-month high after the Fed meeting, helping to boost the rebound of the US dollar index. Meanwhile, the Japanese yen, which fell sharply after the Bank of Japan announced its commitment to loose monetary policy on Tuesday, rebounded during the day, putting an end to its three-day losing streak.

In the commodity market, the supply risk caused by the crisis in the Red Sea shipping continues to support the overall upward trend of international crude oil prices. However, after the US Department of Energy announced last week that EIA crude oil inventories increased instead of decreasing and crude oil production reached a new high, oil prices gradually gave back most of their gains during the day, and the upward momentum was significantly eased compared to the previous two days. According to CCTV reports, in response to the US announcement of the establishment of the so-called Red Sea escort alliance, the Houthi armed group stated that it would target the ships of countries taking action against it. Under the pressure of the rebounding US dollar, gold and some industrial metals such as copper have fallen.

The three major US stock indexes all fell more than 1%, with FedEx leading the decline in S&P 500 constituent stocks, and Nvidia experiencing its largest decline in nearly two months. Micron jumped after its earnings report.

The three major US stock indexes opened lower. The Dow Jones Industrial Average initially fell nearly 100 points, but turned higher towards the end of the morning session, reaching a daily high with a gain of over 80 points. The S&P 500 Index initially fell more than 0.2% at the opening, but turned slightly higher after more than half an hour of trading. The Nasdaq Composite Index opened with a decline of about 0.2%, but turned higher after about ten minutes of trading, rising more than 0.4% in the morning session. However, the three major indexes turned lower in the afternoon session and continued to decline, with losses expanding to more than 1%.

In the end, all three major indexes fell. The Dow, which had set a new record high for five consecutive days, fell 475.92 points, or 1.27%, the largest percentage decline since October 3, with a closing level of 37,082.00 points, marking the first decline in the past ten trading days. The Nasdaq, which had risen for nine consecutive days, fell 1.50%, the largest decline since October 20, with a closing level of 14,777.94 points. The S&P, which had risen for two consecutive days, fell 1.47%, the largest decline since September 26, with a closing level of 4,698.35 points. It not only failed to approach the closing record high set on January 3 last year, but also fell to the lowest level since December 12.

The small-cap Russell 2000, which is dominated by value stocks, fell 1.89% after rebounding to a high not seen since April last year. The tech-heavy Nasdaq 100 Index fell 1.53%, and the Nasdaq Technology Market Cap Weighted Index (NDXTMC), which measures the performance of tech stocks in the Nasdaq 100 Index, fell 1.34%. Both indexes fell after hitting new closing record highs for three consecutive days.

Major US stock indexes fell sharply during Wednesday's midday session.

All sectors of the S&P 500 were hit hard. Except for the communication services sector, which includes Google, which fell less than 0.1%, and the energy sector, which fell nearly 1%, all other sectors fell by at least 1%. Consumer staples and utilities were the biggest decliners, falling by about 2%.

Leading tech stocks rose overall in the morning session, but most turned lower in the afternoon session. Volkswagen, Audi, and Porsche announced that they will adopt Tesla's North American charging standard starting in 2025. Tesla initially rose, but turned lower towards the end of the morning session, closing down more than 3.9%. After rebounding to a closing high since October 12 on Tuesday, it fell to a one-week low. Among the six major FAANMG tech stocks, Alphabet, the parent company of Google, performed the best, rising more than 3% in the morning session and closing up 1.2%. Apple, Microsoft, Meta (parent company of Facebook), Amazon, and Netflix all turned lower in the afternoon session, with declines of nearly 1.1%, 0.7%, 0.3%, nearly 1.1%, and nearly 1.2% respectively. Meta and Netflix fell from their historical highs set two days ago. Overall, chip stocks fell and underperformed the broader market. The Philadelphia Semiconductor Index and the semiconductor industry ETF SOXX both fell by about 2.9% and nearly 3%, respectively, dropping from the record highs set on Tuesday. Among individual stocks, Nvidia, which turned negative in the afternoon, fell by about 3%, marking its largest single-day decline since October 26. AMD and Applied Materials both fell by over 3%, Broadcom fell by over 2%, Intel and Qualcomm fell by nearly 2%, and Arm, which had risen over 3% in the morning, fell by over 1%. Micron Technology, which fell by over 4%, announced a first-quarter loss that was lower than expected after the market closed, causing its stock to briefly rise by over 5%.

Including Apple, Microsoft, Alphabet, Meta, Nvidia, Tesla, and Amazon, the seven major tech stocks plunged during Wednesday's midday trading.

Tesla, Apple, and other seven major tech stocks plunged during Wednesday's midday trading.

AI concept stocks followed the market's decline, underperforming the broader market. By the close, C3.ai (AI) fell by 7.9%, SoundHound.ai (SOUN) fell by 6.7%, BigBear.ai (BBAI) fell by 6.2%, Palantir (PLTR) fell by nearly 4%, and Adobe (ADBE) fell by 1.4%.

The popular Chinese concept stocks that outperformed the broader market on Tuesday fell overall. The Nasdaq Golden Dragon China Index (HXC) fell by over 3%, dropping to its lowest level since October 12 after rebounding on Tuesday. The Chinese concept ETFs KWEB and CQQQ fell by 2.8% and 3.2%, respectively. The three new energy vehicle companies all fell, with NIO, which had risen for two consecutive days after receiving a $2.2 billion additional investment from the Abu Dhabi sovereign fund, falling by about 10%. It fell on the first day after announcing the investment from the Middle East. In the morning, Xpeng Motors fell by nearly 6% and Li Auto fell by over 5%. Among other individual stocks, Gaotu Education fell by over 12%, Bilibili fell by over 6%, JD.com and New Oriental fell by over 4%, Baidu fell by nearly 3%, Pinduoduo and Tencent Music fell by over 2%, NetEase fell by over 1%, and Alibaba, which announced that Alibaba Cloud CEO Simon Hu will also serve as CEO of Taotian Group, initially rose by about 1% but closed down by over 1%. Bitcoin mining giant Canaan Inc. rose by over 15%.

Among the stocks with significant volatility, FedEx opened more than 10% lower after announcing second-quarter revenue and profit that were lower than expected and lowering its full-year revenue guidance. It closed down by about 12%. Winnebago Industries, a motorhome manufacturer that reported first-quarter earnings below expectations, initially fell by over 7% and closed down by 5.6%. After announcing the acquisition of insurance brokerage company NFP for $7 billion in cash and $6.4 billion in its own stock, insurance consulting company Aon fell by 6%. Marathon Digital, which mines cryptocurrencies and announced the acquisition of two bitcoin mining farms for $178.6 million, initially rose by over 10% during midday trading but closed up by only 0.6%. European stocks rose for two consecutive days as UK CPI strengthened expectations of interest rate cuts. The STOXX Europe 600 Index closed at its highest level since January 20 last year for two consecutive days. The main European stock indices failed to continue their rise, with the DAX, FTSE, and CAC rising by less than 0.1%, 1%, and 2% respectively.

In terms of sectors, real estate rose by nearly 1.1% due to the decline in European bond yields. Telecommunications rose by about 1.2%, mainly due to the Spanish government's announcement that it will acquire up to 10% of the shares and offset the impact of similar transactions by Saudi Telecom Company (STC). Telefonica, the Spanish telecommunications company, rose by 3.2%, leading the STOXX 600 constituents. Among other individual stocks, Dutch biotech company Argenx (ARGX), listed in Belgium, plummeted by 25.6% after its autoimmune disease therapy that causes skin blistering failed to produce significant results in late-stage trials. DHL, affected by its peer FedEx, fell by 1.9% in Germany.

UK bond yields fall by more than 10 basis points, 10-year German bond yields fall below 2.0% for the first time in nine months

European government bond prices rose for two consecutive days, with the UK CPI announcement expanding the gains and the UK bond yields falling the most. At the end of the bond market, the yield on the UK 10-year benchmark government bond closed at 3.52%, down about 12 basis points during the day, reaching a low point in the past eight months. The yield on the UK 2-year bond closed at 4.06%, down 17 basis points during the day, reaching a low point in the past seven months.

At the end of the bond market, the yield on the 10-year benchmark German government bond closed at 1.97%, down 4 basis points during the day, quickly falling below 2.0% after the UK CPI announcement, losing this level for the first time since March. The yield on the 2-year German bond closed at 2.46%, down 4 basis points during the day, falling below 2.45% before the US stock market opened, reaching a low point since March 27.

10-year US bond yields hit a nearly five-month low, 2-year yields fall by more than 10 basis points

The yield on the 10-year benchmark US government bond hit a high of 3.92% in early Asian trading, then continued to decline, falling below 3.90% before the European stock market opened, and falling below 3.88% before the US stock market opened, refreshing the intraday low since July 27, the day after the Federal Reserve meeting last week. After the US stock market opened, the decline narrowed, rising above 3.90% in early trading, and then widening again during the afternoon session. After the US stock market closed, it briefly fell below 3.85%, continuing to refresh the nearly five-month low. At the end of the bond market, it was about 3.85%, down about 8 basis points during the day.

The performance of the 20-year US bond auction on Wednesday was poor, and the yield on the 30-year US bond fell below the 4.0% level during intraday trading. The 2-year US Treasury yield, which is more sensitive to interest rate prospects, hit a daily high above 4.44% in the early Asian session. After the release of UK CPI data, it accelerated its decline. European stocks fell below 4.40% at the beginning of the session, and US stocks hit a daily low of 4.33% after the close, but it has not yet approached the half-year low of 4.28% set last Thursday. It was around 4.33% at the end of the bond market, dropping nearly 11 basis points during the day, after rising for two consecutive days and falling for two consecutive days.

Since the announcement of the decision by the Federal Reserve last Wednesday, yields on US Treasury bonds of various maturities have fallen by more than 30 basis points.

Pound Sterling Accelerates Decline from Post-Fed High, US Dollar Index Rebounds

The ICE US Dollar Index (DXY), which tracks the exchange rates of the US dollar against six major currencies including the euro, maintained a bullish trend throughout Wednesday, briefly turning negative in the Asian session to hit a daily low. After the release of UK CPI data, the gains continued to expand. The US stock market approached 102.50 before the market opened, but then retreated. In the early trading session, most of the gains were given up, but the gains expanded during the midday trading session. The US stock market rose above 102.50 at the end of the trading day, hitting a daily high, with an increase of nearly 0.4% during the day. It did not approach the low of 101.80 to 101.77 set last Thursday, which was the lowest since August 4th when it fell to 101.742.

By the end of Wednesday, the US Dollar Index was above 102.40, with an increase of nearly 0.3% during the day. The Bloomberg Dollar Spot Index, which tracks the US dollar against ten other currencies, rose by 0.3%. Both the US Dollar Index and the Bloomberg Dollar Spot Index rebounded after falling on Tuesday.

After the release of UK CPI data, the British pound accelerated its decline against the US dollar, hitting a daily low of 1.2630 before the US stock market opened, with a decline of nearly 0.8% during the day. It fell more than 1% from the high reached on August 22nd when it approached 1.2800. The euro fell below 1.0940 against the US dollar during the European stock market session, with a decline of over 0.4% during the day. It did not continue to approach the high reached on November 29th when it rose above 1.1000. The Japanese yen, which fell more than 1.5% during Tuesday's trading session, rebounded during Wednesday's trading session. The US dollar against the Japanese yen turned downward in the early Asian session and continued to decline during the European session, falling below 143.30 to hit a daily low. It fell 0.4% during the day, but it has not approached the low of 141.00 set on July 31st since the high reached on the day of the Federal Reserve decision last Wednesday.

The offshore renminbi (CNH) against the US dollar rose to a daily high of 7.1207 in the early Asian session, but then continued to decline. The US stock market fell below 7.1540 to hit a daily low of 7.1544 at the end of the trading day, with a decline of 335 points during the day. On December 21st at 4:59 am Beijing time, the offshore RMB against the US dollar was reported at 7.1507 yuan, a decrease of 298 points from the New York closing on Tuesday. It fell back after rebounding on Tuesday, marking the third consecutive day of decline in the past four trading days.

Bitcoin (BTC) rose above $44,300 in early US stock trading, reaching a high not seen since December 9th. It rose more than $2,100 and 5% from the intraday low in the Asian market, but fell to $44,000 at midday and dropped below $43,600 after the US stock market closed. The recent 24-hour increase narrowed to less than 3%.

Crude oil rose for three consecutive days, reaching a new high for the month before falling back during the US stock market session. When the US stock market opened, US WTI crude oil approached $75.40, up about 1.9% for the day, while Brent crude oil rose above $80 to $80.06, up 1.7% for the day. However, most of the gains were gradually given up after the release of the US EIA crude oil inventory data.

WTI February crude oil futures closed up $0.28, or 0.38%, at $74.22 per barrel, while Brent February crude oil futures closed up $0.47, or 0.59%, at $79.70 per barrel. Both US and Brent crude oil reached their highest closing levels since November 30th, and Brent crude oil hit a new high since November 30th for two consecutive days.

US gasoline and natural gas futures performed differently. NYMEX January gasoline futures closed slightly down $0.0001, basically flat, at $2.2007 per gallon, stabilizing at the high reached on Tuesday. NYMEX January natural gas futures closed down 1.80% at $2.4470 per million British thermal units, falling for two consecutive days after a four-day rally, continuing to retreat from the high reached on December 8th for two consecutive days.

London base metals futures saw mixed performance on Wednesday. London copper fell from the high reached on Tuesday and approached the high of $8,600 set on December 1st. London zinc also fell from the high reached after a four-day rally since mid-November. London aluminum continued to fall from the six-week high set on Monday. However, London lead, nickel, and tin all rose for two consecutive days. London lead matched the two-week high set last Friday, while London nickel and tin approached the highs set last Friday and Thursday respectively, which were the highest in nearly a month and nearly two months.

New York gold futures initially turned lower during the European stock market session and maintained a downward trend. It fell below $2,043 during the US stock market closing, down nearly 0.5% for the day.

Gold futures fell after two consecutive days of gains. COMEX February gold futures closed down 0.21% at $2,047.7 per ounce, falling from the closing high reached on Tuesday after surpassing $2,050, which was the highest since December 1st. The gold futures, which have been rising for consecutive days, have experienced a pullback.