U.S. investors face uncertainty after a late Wednesday sell-off, prompting speculation on whether it signals an early arrival of January’s cold reality or a temporary squabble. Thursday’s market opening will be closely watched, with S&P and Nasdaq futures initially up around 0.5%, hinting at a potential recovery from the previous day’s dip. The abrupt decline, despite the recent rally, left analysts puzzled, with explanations ranging from year-end liquidity issues to concerns about Red Sea incidents affecting shipping routes.
Fed’s Influence: The market’s momentum continues from the Federal Reserve’s dovish shift last week, reflected in the rates market. The benchmark 10-year U.S. Treasury yield hovers near a five-month low, supporting the ongoing positive sentiment. Italy’s 10-year yield also hits 16-month lows, propelled by EU finance ministers’ agreement on the latest reform of fiscal rules. Despite the recent volatility, the S&P 500 remains up 9.5% since October, poised for its best quarter in two years.
The day’s data calendar is relatively light, featuring final Q3 GDP figures and weekly jobless claims in the U.S., along with Canadian retail sales. Investors anticipate Friday’s U.S. core PCE price index, the Fed’s preferred inflation measure, for insights into underlying inflation trends. As the holiday season approaches, market participants remain watchful for any developments that could shape the year-end market landscape.
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