The US stock market experienced a "flash crash" before Christmas, with a thrilling but ultimately safe eight-week rally. After Nike's earnings report, the stock plummeted by 10%, and global gaming stocks experienced a sharp decline during trading hours.

The favored inflation indicators by the Federal Reserve have seen a second consecutive day of cooling inflation news: following the announcement of the third-quarter core PCE price index on Thursday, which showed a YoY growth rate of 2% and reached a two-year low, the November core PCE price index released on Friday also exceeded expectations, slowing down to 3.2% YoY and hitting a two-year low. The annualized level of this index in the past six months even fell below 2% for the first time in over three years, dropping to 1.9%.

These data continue to strengthen market expectations of a rate cut by the Federal Reserve next year. The market has almost fully priced in a rate cut in March next year, with a probability of action starting in March reaching 90%.

Currently, the market expects a 90% probability of a rate cut starting in March next year.

This week, market expectations for the extent of rate cuts by the Federal Reserve next year reached a new high. Friday's pricing showed that traders expect the Fed to cut rates by 163 basis points throughout next year, more than double the latest forecast released by the Fed last week.

After the release of the PCE, the US dollar index accelerated its decline, falling to a nearly five-month low. US Treasury prices continued to rise, with the yield on the two-year Treasury, which is sensitive to interest rates, hitting a daily low and approaching the low after Thursday's data release. The yield on the benchmark 10-year Treasury approached the nearly five-month low set on Thursday. Unlike short-term bonds, the yield rose slightly during the trading session. This week, US Treasury yields continued to decline overall, but the decline was not as significant as last week when the Fed signaled a dovish turn.

After the release of the PCE, major US stock indexes rose in early trading but turned lower in the afternoon. The S&P and Dow were mainly affected by Nike, a component stock that saw a sharp drop of over 10% due to a downward revision of its revenue guidance for the second half of the fiscal year, plans to cut costs by $2 billion, and a large-scale layoff. Despite the sharp decline on Wednesday, which marked the largest daily drop in over two months, the three major stock indexes recovered most of their losses under the boost of the PCE data, maintaining their upward momentum for a single week and a half before the long Christmas weekend.

Compared to the overall performance of the European and American stock markets, gaming stocks have experienced greater volatility. China has released a draft of new regulations for online games, which propose requirements such as prohibiting the setting of continuous recharge incentives and setting user recharge limits for online games. Major gaming giants and related stocks both domestically and internationally experienced a sharp decline in stock prices. Tencent's Hong Kong stocks fell more than 10%, while Prosus, Tencent's major shareholder, and its parent company Naspers listed in Europe and South Africa, fell 20% during trading. Ubisoft's European stocks also fell more than 8%, and NetEase's Hong Kong stocks fell nearly 25%, followed by a more than 20% drop in US stocks at the opening. Microsoft, which acquired Activision Blizzard, experienced multiple short-term declines during trading.

In the commodities market, the expectation of a rate cut by the Federal Reserve continues to increase the attractiveness of gold. After the release of the PCE, the price of gold accelerated its rise, rising more than 1% at one point. The New York gold futures closed near $2,070, approaching the historical high set earlier this month. The Shanghai Futures Exchange announced a dramatic reduction of 9,890 tons in aluminum inventories this week, leading to a simultaneous increase in domestic and international aluminum prices. London aluminum rose nearly 4%, reaching a high not seen since the end of September, while London copper experienced a slight retreat but continued to rise throughout the week.

International crude oil prices continued to decline, falling for two consecutive days after Angola announced its withdrawal from OPEC. Despite concerns over the Red Sea shipping crisis and its impact on supply, oil prices continued to rise, achieving their best weekly performance in two months. Some commentators believe that Angola's departure from OPEC may open the door for increased Chinese investment in the country's oil and other sectors, especially considering the investment agreement signed between China and Angola two weeks ago to promote and protect mutual investments. However, it will take time for Angola to increase production, and the impact of the Red Sea crisis and US inflation on oil prices is expected to outweigh the potential increase in production from Angola.

S&P Approaches Historical High, Achieving the Longest Weekly Gain Since 2017; Nike Drags Down Dow Jones with a Slight Decline; NetEase and Tencent Experience Double-Digit Drops

The three major US stock indices did not collectively open higher, but quickly rose. The Dow Jones Industrial Average, which opened lower, initially fell 55 points but quickly turned higher. It rose more than 130 points and over 0.3% in early trading. The S&P 500 Index and the Nasdaq Composite Index maintained their upward momentum, both rising nearly 0.6% in early trading. However, their gains narrowed later in the morning session, and all three indices briefly turned negative during the midday session. At one point, the Dow Jones fell more than 135 points and nearly 0.4%, while the S&P and Nasdaq fell more than 0.2%. However, they all rebounded later in the day. In the final trading session, only the Dow Jones closed lower, down 18.38 points or 0.05%, at 37,385.97 points, failing to approach the closing historical high set on Tuesday after five consecutive days of gains. The S&P closed up 0.17% at 4,754.63 points, continuing to approach the closing high set on January 4th of last year, with a difference of 0.9% from the closing historical high on January 3rd of last year. The Nasdaq closed up 0.19% at 14,992.97 points, approaching the closing high set on January 12th of last year, and marking two consecutive days of gains for the S&P.

Small-cap stocks, mainly value stocks, represented by the Russell 2000 Index, closed up 0.84%, outperforming the broader market and reaching a new closing high since April of last year. The tech-heavy Nasdaq 100 Index closed up 0.12%, approaching the closing historical high set on Tuesday. The Nasdaq Technology Market Cap Weighted Index (NDXTMC), which measures the performance of technology stocks in the Nasdaq 100 Index, closed up less than 0.1%, setting a new closing historical high and achieving an eight-week consecutive gain with a cumulative increase of 1.33% for the week. If the intraday gains are maintained, the main US stock indices will continue to rise collectively this week. The S&P 500 has risen by 0.75%, the Dow Jones Industrial Average has risen by 0.22%, the Nasdaq Composite has risen by 1.21%, and the Nasdaq 100 has risen by 0.93%. They have all risen for eight consecutive weeks. The S&P 500 and Nasdaq have achieved their longest consecutive weekly gains since 2017, and the Dow Jones has achieved its longest weekly gains since 2019. The Russell 2000 has risen by 2.46% and has risen for six consecutive weeks.

Among the components of the Dow Jones Industrial Average, Nike (NKE), which reported lower-than-expected revenue for the second quarter and warned of weaker revenue in the second half of this fiscal year, and announced a plan to cut $2 billion in costs over the next three years, opened lower by 11.6% and fell as much as 12.3% during the trading session, closing down 11.8%, the largest decline among the components.

Among the major sectors of the S&P 500, only non-essential consumer goods, which include Nike, fell by nearly 0.7% on Friday, while essential consumer goods rose by nearly 0.7%, materials rose by over 0.6%, and the IT sector, which includes Apple, rose slightly. Utilities fell by only 1.3% this week, while communication services, which include Google, rose by over 4%, leading other sectors by a wide margin. Energy, materials, and healthcare rose by over 1%, while IT rose by less than 0.1%, with the smallest increase.

Most of the leading technology stocks turned lower during the trading session. After the official launch of the Shanghai Super Factory project with an annual production capacity of 10,000 units, Tesla initially rose by nearly 1.5% but fell during the afternoon session, closing down nearly 0.8%, failing to continue approaching the high since October 12th set on Tuesday, and falling by nearly 0.4% this week.

Among the six major FAANMG technology stocks, Microsoft, which acquired Activision Blizzard, initially fell during the trading session but rose by nearly 0.3% at the close, rising for two consecutive days to a high since November 30th. Alphabet, the parent company of Google, rose by nearly 0.8%, rising for six consecutive days to a high in over a year. Apple and Meta, the parent company of Facebook, fell during the early trading session, with Apple falling by nearly 0.6%, falling for three consecutive days to a low since December 11th, and Meta falling by 0.2%, falling from the closing high set during the rebound on Thursday. Netflix fell by approximately 1%, failing to continue approaching the high set on Tuesday. Amazon, which rebounded on Thursday and approached the high set on Monday, fell by nearly 0.3%.

Except for Apple, which fell by 2% this week, the aforementioned technology stocks have all risen. Alphabet rose by 6.7%, Meta rose by 5.5%, Netflix rose by over 3%, Amazon rose by over 2%, and Microsoft rose by approximately 1%.

Overall, chip stocks have risen for two consecutive days, with the Philadelphia Semiconductor Index and the Semiconductor Industry ETF SOXX rising by nearly 0.4% and approximately 0.3% respectively. The former has reached a new all-time high, and the latter is approaching the high set on Tuesday. They have risen by approximately 0.4% and 0.1% respectively this week. Among individual stocks, Micron Technology rose by over 1% as of the close, as its earnings report released on Thursday exceeded expectations and caused a nearly 9% surge. It has risen by over 6% this week. Intel rose by nearly 2%, Qualcomm rose by 0.7%, and Applied Materials rose by 0.4%. However, Nvidia fell by over 0.3% and has fallen by over 0.1% this week. Broadcom fell nearly 0.5%, while AMD fell 0.2%.

Most AI concept stocks fell, underperforming the broader market. C3.ai (AI) fell over 2% in early trading, SoundHound.ai (SOUN) fell 2.8%, Palantir (PLTR) and Adobe (ADBE) initially turned lower and closed down about 1% and 0.2% respectively, while BigBear.ai (BBAI) rose over 6%.

US gaming stocks initially fell in unison but later narrowed their losses or turned higher. Unity Software (U) initially fell 5.7% and closed down 1.3%, while Roblox (RBLX) opened down over 2%, then turned higher and closed up nearly 3.4%. Electronic Arts (EA) initially fell over 0.4%, then turned higher and rose nearly 0.6% in early trading, but fell again at midday and closed down nearly 0.2%.

Popular Chinese concept stocks that rebounded strongly on Thursday retreated and underperformed the broader market. The Nasdaq Golden Dragon China Index (HXC) fell 2.2%, down 1.3% for the week. Chinese concept ETFs KWEB and CQQQ fell 4.3% and 3.2% respectively. Among stocks engaged in online gaming business, NetEase initially fell 22% and closed down over 16%, Tencent also fell over 10% intra-day and closed down about 9.9%, and Bilibili initially fell 10% and closed down nearly 5%. The performance of the three new energy vehicle companies varied, with NIO initially turning higher and closing up over 1%, Li Auto closing slightly higher, and XPeng Auto falling 3.7% initially and closing down 2.5%. In other stocks, Tencent Music initially fell 8% and fell less than 6% in early trading, while Baidu, JD.com, and Pinduoduo all fell over 2%, and Alibaba fell over 1%.

Among the more volatile stocks, after Bristol-Myers Squibb announced its acquisition of Karuna Therapeutics at a price of $330 per share, valuing the company at $14 billion, a 53% premium over Thursday's closing price, the biopharmaceutical company Karuna Therapeutics (KRTX) rose 47.7%; Bristol-Myers Squibb (BMY) rose 2%; after disclosing that its subsidiary has won a $515 million contract from the US government to design, manufacture, and operate 18 spacecraft for the government, Rocket Lab (RKLB) rose 22.8%; after JMP Securities nearly doubled its target price and called it the Amazon of the cryptocurrency industry, the largest US cryptocurrency exchange Coinbase (COIN) rose 4.4%; and after announcing plans to merge with a special purpose acquisition company (SPAC) in a $4.6 billion deal, Lions Gate Entertainment (LGF) fell 4.2%; influenced by Nike, athletic shoe retailer Foot Locker (FL) fell nearly 4%.

In Europe, the pan-European stock index rebounded after two consecutive days of gains on Thursday. The STOXX Europe 600 index approached the closing high since January 20 last year, which was set for two consecutive days. Most major European stock indices rose, with the UK stock market ending its three-day winning streak, while the German and Italian stock markets rebounded after two days of declines. The Spanish stock index rose less than 0.1% for two consecutive days, while the French stock index fell for two consecutive days. In various sectors, banks led the gains with an increase of nearly 0.7%, while retail bucked the trend and fell by about 1%. Among individual stocks, Prosus, the major shareholder of Tencent listed in the Netherlands, fell by about 20% during the day and closed down 13.4%, marking the largest daily decline in over a year. French-listed gaming giant Ubisoft fell by over 8% during the day and closed down 1.5%. German-listed Adidas and Puma fell by 5.3% and 7.2% respectively, due to the disappointing performance and guidance of sportswear giant Nike. JD Sports, listed in the UK, fell by 5.1%.

The STOXX 600 index rose for the sixth consecutive week, marking the longest consecutive weekly gain since December last year. The performance of stock indices in various countries varied, with the UK stock market up more than 1% for four consecutive weeks, the Spanish stock market up for eight consecutive weeks, while the German and Italian stock markets fell for two consecutive weeks after six consecutive weeks of gains, and the French stock market fell after five consecutive weeks of gains.

In various sectors, basic resources, which include mining stocks, led the gains this week with an increase of over 2%, supporting the UK stock market to lead among European countries. Oil and gas stocks rose by over 1% supported by the rise in oil prices, offsetting the previous week's decline. Telecommunications, healthcare, tourism, and financial services all rose by over 1%, while technology and automotive stocks fell by 2.7% and 2.5% respectively, leading the decline against the trend. Personal and household goods, which include luxury goods, fell by over 1%, dragging down the French stock market.

UK CPI Announcement: 2-year UK bond yield drops more than 20 basis points

The upward momentum of European government bond prices continued to slow down, and yields hit a daily low after the release of US PCE data, but the decline narrowed afterwards. At the end of the bond market, the yield on the UK 10-year benchmark government bond closed at 3.50%, down 2 basis points during the day, and remained close to the 8-month intraday low set on Thursday at 3.48% for the second consecutive day. The yield on the 2-year UK bond closed at 4.00%, down 1 basis point during the day, continuing to hit a 7-month low. The yield on the 10-year benchmark German government bond closed at 1.98%, up 1 basis point during the day, rising after the opening of the US stock market, temporarily departing from the intraday low set on March 20th near 1.94%. The yield on the 2-year German bond closed at 2.41%, down 3 basis points during the day, continuing to hit a low since the end of March for the third consecutive day.

European bond yields continued to decline this week, with long-term yields falling for four consecutive weeks. The yield on UK bonds has dropped by at least 10 basis points, reflecting the market's expectation of a rate cut by the Bank of England next year after the unexpected slowdown in UK CPI inflation. The yield on the 10-year UK bond has fallen by approximately 18 basis points this week, and the yield on the 2-year UK bond has fallen by approximately 24 basis points. The yield on the 10-year German bond has fallen by approximately 3 basis points, and the yield on the 2-year German bond has fallen by approximately 8 basis points. After the release of the PCE, the two-year US Treasury yield hit a new daily low, while the ten-year yield approached a five-month low before rebounding.

During the Asian session, the yield on the 10-year benchmark US Treasury bond rose above 3.91%, reaching a daily high. It then retreated and fell below 3.90% before the European stock market opened. Prior to the US stock market pre-market and the release of the PCE, it fell below 3.85%, hitting a daily low. It dropped by about 4 basis points during the day, approaching the intra-day low since July 27th, which was continuously refreshed for two consecutive days. After the release of the PCE, it approached the daily low but gradually rebounded. The US stock market rose above 3.90% in early trading, and briefly exceeded 3.92% at midday. By the end of the bond market, it was around 3.89%, with a slight increase during the day. It almost failed to maintain the rebound momentum from Thursday. It has fallen by about 2 basis points this week, falling for two consecutive weeks, but the decline is far less than the 32 basis points announced by the Federal Reserve last week.

The two-year US Treasury yield, which is more sensitive to interest rate prospects, rose above 4.37% during the Asian session, hitting a daily high. After the release of the PCE, it fell below 4.31% before the US stock market pre-market, hitting a daily low. It dropped by about 4 basis points during the day, approaching the intra-day low since Thursday, but it did not approach the low of the past six months, which was refreshed by falling below 4.28% on Thursday. By the end of the bond market, it was around 4.32%, dropping by nearly 3 basis points during the day. After rebounding on Thursday, it fell back this week, with a decline of about 12 basis points, falling for two consecutive weeks, and a decline of about 28 basis points last week.

Most of the yields of US Treasury bonds with different maturities have declined this week, with short-term yields leading the decline, while the yields of ultra-long-term US Treasury bonds have slightly rebounded.

After the release of the PCE, the US dollar index hit a new low in nearly five months, and the offshore renminbi fell below 7.16 before rebounding by more than 300 points, but still closed lower.

The ICE US Dollar Index (DXY), which tracks the exchange rates of the US dollar against six major currencies including the euro, remained below 102.00 on Friday and approached 101.90 during the Asian session, hitting a daily high. It rose slightly during the day, but fell continuously after the European stock market opened. Before the release of the PCE, the decline narrowed and rose above 101.70. After the release, the decline quickly expanded. In early trading, the US stock market fell below 101.50 and approached 101.40, hitting an intra-day low since July 28th, with a 0.4% decline during the day. The decline gradually narrowed for most of the day.

By the end of the US stock market on Friday, the US dollar index was above 101.70, with a decline of more than 0.1% during the day and a decline of more than 0.8% this week. The Bloomberg Dollar Spot Index, which tracks the exchange rates of the US dollar against ten other currencies, fell by less than 0.1%, hitting a low for the same period since July 31st for two consecutive days. It has fallen by nearly 0.7% this week, and both the US dollar index and the Bloomberg Dollar Spot Index have fallen for two consecutive days and two consecutive weeks. The Bloomberg Dollar Spot Index hit a nearly five-month low on Friday, with five consecutive weeks of decline in the past six weeks.

Among non-US currencies, the yen, which had risen for two consecutive days, turned lower during intraday trading. The USD/JPY quickly fell after the release of the US PCE data, and the pre-market trading of US stocks briefly tested 141.90, close to the daily low. However, it rebounded and maintained an upward trend after the opening of the US stock market. It reached a high of around 142.70 during the trading session, with an intraday increase of nearly 0.4%. It managed to avoid the danger of falling to the low point since July 31st, which was set last Thursday when the Bank of Japan announced its decision to maintain loose monetary policy. The yen has fallen by about 0.2% this week.

The euro briefly rose above 1.1040 against the US dollar during pre-market trading of US stocks, reaching a high not seen since August 10th. However, it gave up most of its gains later in the day and closed above 1.1010. The pound sterling rose above 1.2740 against the US dollar during European stock market trading, with an intraday increase of over 0.4%. However, it still failed to reach the high point of August 22nd, when it approached 1.2800.

The offshore renminbi (CNH) fell to 7.1636 against the US dollar during early Asian trading, hitting a new intraday low since last Wednesday for two consecutive days. Before the European stock market opened, it briefly recovered to 7.13, reaching a high of 7.1292, and then fluctuated downward. After the release of the US PCE data, it quickly rebounded, but fell below 7.15 during the pre-market trading of US stocks. At 5:59 am Beijing time on December 23rd, the offshore renminbi against the US dollar was reported at 7.1544 yuan, a decrease of 109 points from the New York closing on Thursday. It fell after rebounding on Thursday and has fallen by 198 points this week, following a rebound of over 500 points last week. This is the fifth consecutive week of decline in the past six weeks.

Bitcoin briefly rose above $44,000 during pre-market trading of European stocks, reaching an intraday high not seen since December 8th. However, it fell below $43,500 before the US stock market opened, with a drop of over $900 and a decrease of more than 2% from the daily high. The decline narrowed later, and it briefly rose above $44,000 during midday trading of US stocks. It closed above $43,700 at the end of the US stock market, with a decrease of nearly 0.2% in the past 24 hours and an increase of over 3% in the past seven days.

Crude oil fell during Friday's trading session, despite a two-week consecutive increase and a significant weekly gain in two months.

US WTI crude oil approached $75 when US stocks hit a new daily high, with an intraday increase of nearly 1.5%. Brent crude oil rose to $80.1, up 0.5% during the day. However, US oil fell multiple times. When US stocks hit a new daily low during pre-market trading, it fell below $73.40, with an intraday decrease of nearly 0.7%. Brent crude oil continued to fall after the pre-market trading of US stocks, reaching below $78.70, with a decrease of over 1.3% during the day.

WTI February crude oil futures closed down 0.45% at $73.56 per barrel, while Brent February crude oil futures closed down 0.79% at $79.07 per barrel. Both US oil and Brent oil continued to fall from the closing high since November 30th. This week, US crude oil rose by about 2.5%, while Brent crude rose by about 3.3%, both achieving the largest weekly gain since October 13th. After seven consecutive weeks of decline, this is the first time that crude oil has risen for two consecutive weeks, except for the first two weeks of the Israeli-Palestinian conflict.

US gasoline and natural gas futures continued to fluctuate. NYMEX January gasoline futures fell by 1.3% to $2.1301 per gallon, hitting a closing low since December 14th, falling for two consecutive days. It fell by 1.68% this week after stopping the seven-week decline last week. NYMEX January natural gas futures rose by 1.48% to $2.5720 per million British thermal units, hitting a high since December 8th for two consecutive days. It rose by 3.25% this week after six weeks of decline.

London aluminum rose by nearly 4%, reaching a new three-month high, while London copper fell. Gold rose for two consecutive weeks to a three-week high.

Most London base metal futures fell on Friday. London nickel, which rose for three consecutive days, fell by more than 2%, failing to approach the high since mid-November set last Friday. London tin fell by more than 1%, continuing to fall from the high of nearly two months set last Thursday, and London lead fell for two consecutive days. London copper fell from the high since November 1st set on Thursday. London aluminum rose by nearly 3.7%, reaching a high since the end of September, and London zinc rebounded after two days of decline. London zinc hit a high since mid-November set on Tuesday.

This week, base metals performed differently. Thanks to a sharp rise on Friday, London aluminum rose by nearly 3.5% for the whole week, London zinc rose by 2.7%, and London copper rose by about 0.3% despite a slight decline this week. Nickel fell by more than 3.7% after rebounding last week, and tin, which rose for two consecutive weeks, fell by more than 1%. Lead fell by 0.9% after stopping the three-week decline last week.

New York gold futures maintained an upward trend throughout Friday, with US stocks hitting a daily high of $2083 in early trading, rising by more than 1.5% during the day. Spot gold rose above $2070 in early US stock trading, hitting an intraday high since December 4th, and rose by 1.2% during the day, gradually giving back more than half of the gains.

Finally, COMEX February gold futures rose by 0.87% to $2069.1 per ounce, hitting a closing high since the beginning of this month, approaching the closing historical high of $2090 set on the first day of this month. Gold rose by 1.64% this period, rising for two consecutive weeks. In the 11 weeks since the Israeli-Palestinian conflict, it only fell last week.