U.S. stocks mixed today: chip stocks hit hard, interest rate cut expectations rescue the market.

Market Update

The U.S. stock market had a poor start, with the S&P 500 up 0.06%, the Nasdaq 100 down 0.60%, and the Dow Jones up a mere 0.62%. In short: the market is a bit weak, but it hasn't collapsed.

Who is the culprit? Nvidia comes under fire

The worst-hit is the chip sector. According to The Information, Meta (the parent company of Facebook) is in negotiations with Google to make large-scale purchases of Google's AI chips (TPUs) for its data centers in 2027. What does this mean if the deal goes through? The monopoly of NVIDIA in the AI chip market could be broken.

The result is:

• NVIDIA (NVDA) plummeted over 5%
• AMD's decline is even worse, over 7%.
• ARM, Qualcomm and other chip stocks all fell.

Cryptocurrency concept stocks have also been affected, with Coinbase falling over 4%, and Bitcoin-related stocks collectively weakening.

The reversal has arrived: Interest rate cut expectations boost

But the situation improved in the afternoon. Why? The U.S. economic data was too weak:

• Retail sales in September increased by only 0.2% (expected 0.4%)
• ADP data shows a month-on-month decline in private wages
• The consumer confidence index in November plummeted to 88.7, hitting a 7-month low.
• The 10-year U.S. Treasury yield fell to a new low of 4.00% in 3.5 weeks.

What does this mean? The probability of the Fed cutting interest rates has soared to 80%. At the FOMC meeting on December 9-10, a 25 basis point cut is almost a done deal.

The biggest beneficiaries are real estate stocks: Builders FirstSource (BLDR) rose over 5%, and Toll Brothers, Lennar, and others also rose over 4%. Lower interest rates = cheaper mortgages = renewed enthusiasm for home buying.

Casino stocks are also surging, with Las Vegas casino revenue in October increasing by 8.2% year-on-year to $749 million, and MGM Resorts jumping directly by 5%.

The Final Frenzy of Earnings Season

Among the 500 companies in the S&P 500, 475 have reported earnings, with 83% beating expectations. Earnings growth for the third quarter is 14.6%, far exceeding the expected 7.2%. This is the best performance since 2021.

Individual stocks performed explosively: Symbotic up 39%, Kohl's up 34% (retail exceeding expectations), Zoom up 12% (raised full-year guidance).

Highlights of the Week

On Wednesday, there will be initial jobless claims data, Chicago PMI, and other economic indicators, as well as the Federal Reserve's Beige Book. The market is now awaiting these data to confirm the story of interest rate cuts.

Summary in One Sentence: Chip stocks were targeted today by Google's AI ambitions, but the weak US economic data was appealing, providing ammunition for those favoring interest rate cuts, and in the end, the market held up.