The US stock market closed lower last Friday, with the tech-heavy Nasdaq Composite Index dropping approximately 1.7%, while the blue-chip Dow Jones Industrial Average and benchmark S&P 500 Index declined by 0.5% and 1%, respectively. For the week, the Nasdaq fell about 1.5%, whereas the Dow gained over 1%. The S&P 500 slipped 0.6% but hit a record high on Thursday. Following the Federal Reserve's latest 25-basis-point rate cut—its third in 2025—market focus has shifted to potential candidates to succeed Jerome Powell as Fed Chair. Former President Trump suggested either Kevin Hassett or Kevin Warsh could be appointed.
This week's economic calendar will also process backlogged data delayed by the government shutdown, including November's jobs report (due Tuesday) and inflation figures (Thursday morning). Corporate earnings will feature Micron Technology (MU.US) on Wednesday, followed by Accenture (ACN.US), Nike (NKE.US), FedEx (FDX.US), and Darden Restaurants (DRI.US) on Thursday.
The Fed's quarter-point cut on Wednesday marked its most contentious decision this year, with three dissenting votes split across differing views. Attention now turns to 2026 rate-cut expectations—the Fed projects just one reduction—and the "drama" over Trump’s pick to replace Chair Jay Powell, whose term expires in May. Prediction markets currently favor National Economic Council Director Kevin Hassett (57% odds), though a recent report revived speculation about former Fed Governor Kevin Warsh (39%).
Macquarie strategist Thierry Wizman noted both candidates align with Trump’s preference for lower rates, weakening the USD as forex markets price in a more dovish Fed. Bond markets are also reacting: LPL Financial’s Lawrence Gillum warned that any perceived shift toward growth over price stability could undermine Treasuries' traditional role as a "ballast" against equity volatility.
**Tech Sector’s "Changing of the Guard"** Oracle’s (ORCL.US) 10% plunge Thursday—after warning of higher AI costs—and Broadcom’s (AVGO.US) 11% Friday drop on margin pressures signal lingering investor skepticism about AI overspending. Oracle delayed data centers for OpenAI, while Microsoft (MSFT.US) scaled back power-lease commitments amid demand miscalculations.
Bank of America highlighted a surge in debt issuance by cash-rich hyperscalers like Meta (META.US) and Oracle, with $75 billion in Q3 investment-grade bonds—double pre-pandemic averages. Capital’s Kyle Rhoda suggests this may herald AI’s next phase: "The biggest beneficiaries won’t be chipmakers or hyperscalers, but companies implementing AI for productivity gains."
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