Tech-led selloff hits Wall Street
Friday morning, U.S. stocks extended this week’s slide as investors dumped expensive tech and AI winners while dialing back confidence in a December Fed rate cut. The Nasdaq fell around 1%–1.8%, the S&P 500 about 0.8%–1.3%, and the Dow more than 500 points, following the worst single-day drop in over a month earlier in the week, according to CNBC and Business Insider market coverage.
Chipmakers and high-valuation AI names are bearing the brunt. Nvidia, AMD, Tesla, and Palantir extended losses after earlier declines of 6% or more, while Oracle’s sharp drop on worries about debt-fueled AI spending has become a symbol of investor unease with the most crowded trade on Wall Street. Bitcoin has sold off in tandem with growth stocks, sliding below $95,000 and more than 20% from its early-October peak, and crypto-linked equities from exchanges to miners are under pressure.
The catalyst is a rapid repricing of Fed expectations. Odds of a December quarter-point cut have slumped from roughly 95% a month ago to about 50% as more officials, including Neel Kashkari and Susan Collins, have signaled caution. A historic gap in official U.S. jobs and inflation data after the six-week government shutdown is adding to anxiety, with Fed Chair Jerome Powell likening policy-making in this environment to “driving in the fog.” That uncertainty is pushing investors toward Treasurys and gold and away from the most rate-sensitive, richly valued corners of the market.
For now, strategists characterize the move as a “healthy pullback” after an almost uninterrupted rally driven by AI and easing hopes. But broken technical patterns in many tech leaders, high overall equity valuations, and fragile confidence in continued rate cuts mean the path ahead could be choppy. Watch whether dip-buyers step in as the Nasdaq’s seven-week winning streak threatens to snap, or whether profit-taking broadens beyond mega-cap tech into the wider market.
China’s slowdown turns broad-based
Friday’s October data from China showed the clearest sign yet that momentum in the world’s second-largest economy is fading on multiple fronts. Official figures and parallel reports from Bloomberg and Reuters show retail sales up just 2.9% year on year, the weakest pace since August 2024 and the fifth straight month of deceleration, despite support from Singles’ Day promotions.
Industrial production also disappointed, rising 4.9% versus expectations around 5.5%, while fixed-asset investment over January–October fell 1.7%, a rare and deepening contraction. Economists highlight a “twin squeeze”: external demand is softening again despite a recent U.S.-China tariff truce, and domestic demand is hamstrung by a prolonged property bust, falling home prices in most major cities, and cautious local governments constrained by heavy debts.
Beijing still targets about 5% growth in 2025, and officials note that only modest fourth-quarter expansion is needed to hit that goal. That math reduces their urgency to unleash large-scale stimulus, especially in housing, where policymakers remain wary of reigniting excesses. Instead, the latest Communist Party economic conclave emphasized gradually boosting household consumption’s share of GDP through reforms to income distribution and the social safety net rather than another infrastructure binge.
For global investors and companies, the data underscore that China is no longer reliably providing a powerful growth impulse. Commodity exporters and European and Asian manufacturers exposed to Chinese capex and construction are most at risk, while multinational consumer brands face a more subdued backdrop than headline GDP suggests. The key question for 2026 is whether incremental reforms and modest easing can offset structural drags from demographics, property deleveraging, and geopolitics, or whether a more decisive policy shift becomes unavoidable.
Fed flies blind after data blackout
With the record 43-day U.S. government shutdown now over, officials and investors are digesting an unprecedented consequence: October’s core macro data may never fully exist. The White House has warned that the October jobs and CPI reports are likely permanently impaired because Bureau of Labor Statistics staff were furloughed and could not conduct the household survey or collect normal price data, as detailed by Fortune’s shutdown coverage.
That gap leaves the Federal Reserve heading into its December 10 meeting without a clean read on the labor market or inflation at a moment when officials are deeply divided about further rate cuts. Market pricing for a December cut has slipped to roughly 50%, and several regional Fed presidents have signaled discomfort with easing amid sticky underlying inflation metrics. The loss of official data also makes it harder for businesses and households to gauge the true state of the economy, magnifying the role of private indicators and anecdotes.
Those private gauges are flashing more yellow than green. UBS and other forecasters cite rising layoff announcements, longer unemployment spells, falling job openings and weak holiday hiring plans as signs the labor market “doesn’t look that good” beneath a still-low headline jobless rate. The Associated Press describes a “no hire” job market in which unemployed workers face the slowest pace of hiring in more than a decade, while the University of Michigan’s consumer sentiment index has dropped near record lows, with particular stress among lower-income households.
The combination of shaky labor dynamics and missing federal data heightens the risk of a policy misstep: keeping rates too high for too long could tip a weakening jobs market into outright contraction, but cutting too aggressively could entrench inflation that remains elevated on many components of the CPI basket. For investors, the data fog is feeding volatility in both bonds and equities and is one reason risk assets have become more sensitive to every Fed speech and every private survey release.
Trump retreats on tariffs to tame food costs
The Trump administration is preparing a significant retreat from portions of its tariff regime in an effort to address voter anger over high grocery bills. According to reporting in The New York Times and Yahoo Finance live updates, the White House is readying broad exemptions from “reciprocal tariffs” imposed earlier this year on imported foodstuffs, including coffee, bananas, beef and some citrus products, and pairing them with new trade agreements across Latin America.
Treasury Secretary Scott Bessent has said a “substantial announcement” is imminent on agricultural tariff cuts for products “we don’t grow here,” emphasizing that lower levies should translate quickly into cheaper supermarket prices. Officials are also exploring a $2,000 “tariff rebate” or “dividend” for families under roughly $100,000 in income, though it is unclear whether any relief would be delivered as direct checks or via broader tax cuts and credits. The pivot follows Democratic gains in recent state and local elections where affordability dominated the campaign narrative.
The political calculus is straightforward: tariffs have become an increasingly visible contributor to stubborn food inflation, and even the president has recently acknowledged that U.S. consumers are “paying something” for his trade policies. Rolling back some duties on non-competing imports offers a way to ease household pain without abandoning the broader “America First” framework, particularly as the Supreme Court scrutinizes the legality of the most sweeping tariffs and trade partners from the EU to Brazil push for deeper deals.
Economically, the impact on headline inflation could be modest but meaningful in categories like coffee and fruit where tariffs have been steep. It may also relieve some pressure on lower-income households that spend a larger share of income on food. The open questions are whether Congress and courts will bless a tariff rebate scheme, how ranchers and other import-competing sectors react to increased competition, and whether this narrow rollback presages a broader rethink of a tariff-heavy strategy that has driven up consumer costs even as it has reshaped global supply chains.
Key moves and data to watch
- Track the odds of a December Fed rate cut via CME’s FedWatch tool as officials react to the loss of October jobs and CPI data and mounting signs of labor-market cooling.
- Watch China’s November indicators after October’s weak retail sales and investment to see if the slowdown stabilizes or deepens, especially in property and manufacturing.
- Monitor the depth of the tech and AI stock pullback: continued underperformance of Nvidia, Tesla and peers relative to the broader market would signal a more lasting de-risking, not just profit-taking.
- Keep an eye on Bitcoin’s slide and ETF flows; sustained outflows and a break toward the low-$90,000s would reinforce the view that crypto is in a new bear phase.
- Watch for formal announcements of U.S. food-related tariff cuts and any concrete design of a tariff “rebate” or dividend, which could alter near-term inflation and consumer sentiment.
