Headline: Dollar Rises, Stocks Retreat as Strong Factory Data Tempers December Rate-Cut Hopes
Key Takeaways
Risk appetite faded to start the week, with the US dollar advancing and equities slipping after a stronger-than-expected Empire State Manufacturing reading stoked concerns the Federal Reserve may stay cautious on cutting interest rates. Treasury yields edged lower, but the firmer data and a busy macro calendar ahead kept investors defensive across equities, commodities, and crypto.
Hawkish-leaning data collided with mixed Fed messaging. Governor Christopher Waller continued to argue for a 25-basis-point cut at the December 9–10 meeting, though he noted a labor-market rebound could remove the need for near-term easing. Vice Chair Philip Jefferson struck a more cautious tone, emphasizing a gradual approach as policy nears neutral and the balance of risks tilts toward employment, even as inflation hovers just below 3%. Traders pared back expectations for a December cut from near certainty to roughly one-third odds after the upbeat Empire State survey (18.1 vs 5.8 consensus).
Markets reflected the risk-off mood. The Dow fell 557 points (-1.18%) to 46,590.24, the S&P 500 dropped 0.92% to 6,672.41, and the Nasdaq declined 0.84% to 22,708.07. The dollar climbed broadly; high beta FX lagged, with AUD and NZD underperforming. Gold slid $58 (-1.44%) to $4,024.79 as the stronger dollar weighed, and WTI crude eased 0.55% to $59.76. Bitcoin extended losses to the lowest since April 22, breaking below $100,000 with an intraday low at $91,168 amid a breach of key technical support. US 10-year yields dipped 2.1 bps to 4.129% (2-year at 3.606%). Nvidia reports after Wednesday’s close; shares fell 1.88% to $186.60, down 13.82% from recent highs. Ahead: import/export prices, industrial production, housing data, the Philadelphia Fed survey, FOMC minutes, jobless claims, and the delayed September jobs report will shape the policy and dollar narrative.
Key Points – Empire State Manufacturing jumped to 18.1 (consensus 5.8), lifting the US dollar and weighing on risk assets. – Markets trimmed December Fed rate-cut odds to around 35% after earlier near-certainty. – Fed’s Waller backs a 25 bp cut in December but says a labor rebound could delay easing; Vice Chair Jefferson urges a cautious approach as policy nears neutral. – Equities fell: Dow -557 (-1.18%), S&P 500 -0.92%, Nasdaq -0.84%; Nvidia shares -1.88% ahead of earnings. – Dollar broadly higher; AUD and NZD led FX declines. Gold -$58 to $4,024.79; WTI crude -0.55% to $59.76. – Bitcoin hit the lowest since April 22, breaking below $100,000 with a session low near $91,168.
