NEW YORK / LONDON (IT BOLTWISE) – December, traditionally a strong month for the markets, began this year with losses on US stock markets. Investors are concerned about upcoming Federal Reserve decisions and ongoing geopolitical tensions. These uncertainties led to a decline in risk appetite and impacted both stock and cryptocurrency markets.
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December, a month traditionally known for positive stock market developments, began this year with an unexpected decline in US markets. Investors, who had previously experienced a week of positive results, retreated into a defensive stance, ending a five-day winning streak. This reluctance is also reflected in the fluctuations of the cryptocurrency market, while in Japan the prospect of a key interest rate increase suggests a change in monetary policy.
The Dow Jones Industrial recorded the largest decline, falling 0.90 percent to 47,289.33 points. The S&P 500 fell by 0.53 percent to 6,812.63 points, while the Nasdaq 100, which had meanwhile suffered significant losses, fell by 0.36 percent to 25,342.85 points. These developments were reinforced by weak economic indicators from US industry, particularly the ISM Purchasing Managers’ Index, which further fueled uncertainties.
Such economic data is viewed particularly closely before an important interest rate decision by the Federal Reserve, in which some market participants expect a reduction in key interest rates. According to Constantin Lüer from NordLB, an interest rate cut is the more likely scenario given the increasing negative developments in the US economy. Geopolitical tensions and customs disputes remain significant risk factors weighing on markets.
The possibility of personnel changes at the US Federal Reserve is also receiving particular attention. US President Donald Trump is exerting pressure and could replace Jerome Powell with a confidant close to him. Kevin Hassett, the chairman of the National Economic Council, is considered the likely favorite. These uncertainties contribute to the general nervousness of investors.
On Monday, NVIDIA was initially one of the losers within the ‘Magnificent 7’, but recovered by 1.7 percent. After a disappointing November, this suggests brighter prospects for the AI chip giant in December. The $2 billion investment in a partnership with Synopsys also gave its shares a nearly five percent boost.
Declines in the cryptocurrency sector weighed on stocks like Strategy, which briefly fell by twelve percent. The fear was that if prices continued to decline, the company would have to sell its crypto holdings. Ultimately, the minus was reduced to 3.3 percent.
The pharmaceutical sector also suffered losses. At Merck & Co, an almost three percent decline in share prices led to discussions about bonds of up to eight billion dollars to refinance the Cidara takeover. Vaccine manufacturers such as Moderna and Biontech also recorded discounts of up to seven percent due to planned new approval restrictions by the FDA.
In the Dow, Disney provided positive news after its film ‘Zootopia 2’ enjoyed one of the best openings for a foreign film in China. This gave the company’s film division a boost in an important market. Barrick Mining continued its winning ways, driven by rising gold prices, lifting shares by 2.4 percent to their highest level since 2012. The company is considering an initial public offering of its gold operations in North America.
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