Wall Street Profit-Taking Triggers Broad Market Sell-Off

Market Overview

U.S. equities opened lower and extended losses last Friday, driven primarily by sharp sell-offs in Oracle and Broadcom, which triggered a cascading decline across AI-related stocks.

• Dow Jones Industrial Average: -0.51%

• S&P 500 Index: -1.07%

• Nasdaq Composite: -1.69%

• Philadelphia Semiconductor Index: -5.10%

The downturn in U.S. markets spilled over into todays Asian session. In contrast, gold reaffirmed its safe-haven role, stabilizing above USD 4,300 per ounce.

According to The Wall Street Journal, former President Donald Trump expressed frustration in a recent interview with what he described as the markets entrenched mindset: whenever economic activity or employment data exceed expectations, the Federal Reserve turns more hawkish to combat inflation. He criticized this “good news is bad news” logic, stating clearly:

“I won‘t allow anyone into the Fed who believes that positive data automatically means interest rates must be pushed to the ceiling to crush inflation.”

This statement directly challenges the Fed’s long-standing data-dependent policy framework. Trump reiterated his strong preference for lower interest rates, targeting a 1% policy rate, a stance sharply at odds with the Feds current position. If economic data remain resilient, tensions between the White House and the Federal Reserve over the future rate path are likely to intensify.

Key Market Outlook

● Fed Officials Signal Continued Restrictive Policy, Dimming 2026 Rate-Cut Expectations

• Austan Goolsbee: Advocates waiting for additional data before cutting rates and expects the number of rate cuts in 2026 to exceed the median projection.

• Jeff Schmid: Emphasizes that inflation remains too high, warranting a moderately restrictive monetary stance.

• Paulson: Focuses on labor market risks, noting that policy remains restrictive; tariffs may raise costs but have not yet triggered broad-based inflation.

• Hammack: Leans toward maintaining a slightly more restrictive policy position.

● Thailand–Cambodia Tensions Reignite, Escalation Risks Rising

Thailand has denied Trump‘s claim that Thailand and Cambodia agreed to a ceasefire. The Thai Prime Minister stated that military operations will continue, with no ceasefire negotiations currently underway. The Thai Army confirmed there are no ceasefire arrangements in place. Meanwhile, Cambodia’s Ministry of Interior announced the suspension of operations at all border crossings along the Thai-Cambodian border.

Key Events to Watch (GMT+2)

21:30 ET – U.S. Empire State Manufacturing Index (December)

23:00 ET – U.S. NAHB Housing Market Index (December)

23:30 ET – Speech by New York Fed President and FOMC voting member John Williams