Why Is The Stock Market Crashing Right Now?
In a Nutshell
Overnight sell-off hit NASDAQ after US-China talks skipped Nvidia chip export controls, causing a minor dip despite recent highs, while rising Treasury yields (10-year >4.5%, 30-year >5%) signal US debt risks amid $39T deficit, hot PPI inflation, and weak labor data slashing Fed cut odds. Avoid shorting semis like Nvidia yet due to strong sentiment; prepare with inverse ETFs like SQQQ or SPXS. Trump may tweet at Powell for cuts as higher yields spike government borrowing costs.
These notes were generated by AI and may contain inaccuracies.
Markets closed in the green today, making new all-time highs. During overnight hours, NASDAQ began selling off and is currently down 0.87%, still less than 1%. Markets might recover tomorrow if Trump tweets.
US and China did not hold in-depth talks on Washington's strict chip export controls against China. US Trade Representative Jameson Greer told Bloomberg: > "This was not a major topic of discussion at the bilateral meeting. We did not talk about chip export controls at the meeting."
Nvidia CEO Jensen was there to potentially break the ice with China, but no discussions occurred. Nvidia hit new all-time highs based on optimism, trading at the highest market cap ever for any publicly traded company. Markets rally 5% on deal optimism (like Trump's deal or no deal), then correct 0.25% on confirmation of no deal, and the cycle continues pushing higher.
Current sell-off is a reminder not to get ahead of yourself. Do not short Nvidia yet—sentiment is still too strong for semis (semiconductors). Hope for pullback, but do not depend on hope in a greedy market. Willing to short if direction and sentiment support it, but challenging lately.
US 10-year Treasury back above 4.5%. 30-year Treasury over 5%. This impacts mortgages—ask lender or real estate friend. Trump cares because it's the rate the US government borrows at; higher rates mean more interest paid on borrowed money.
Rising yields not just in US but Japan, signaling uncertainty in US debt repayment risk. Investors demand more yield due to risk.
US deficit at $39 trillion. This week's PPI report (Producer Price Index) at highest core PPI since 2022, reminiscent of 40-year high inflation that sparked Fed rate hikes to slow economy post-pandemic.
Weak labor market. Inflation rising on producer and consumer sides. Markets ignore due to semiconductor focus, but do not forget: future opportunity in semis, yet inflation up, labor weak, low likelihood of Fed rate cuts (cutting is inflationary).
Administrations usually ignore stock market moves, but Trump cares about bond yields. Expect Jerome Powell tweets on Truth Social calling out Powell and begging for rate cuts, as higher yields hurt government by increasing borrowing costs.
NASDAQ still dropping during talk. Hope for continued drop to create deals.
What goes up when markets go down: SQQ, SPXS (inverse-based ETFs). Much happening overnight—markets could recover at open. Discuss more in tomorrow's live trading session (every morning at market open, second link in description). End year green.
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