“In a crisis, all correlations go to one” goes the old market saying. While it’s not quite crisis time yet, a bout of market fear can still cause plenty of damage—and that will put pressure on the Federal Reserve.
Cryptocurrencies
continue to be the market’s leading indicator of risk appetite and Bitcoin crashed to a more than six-month low Monday. Perhaps more surprisingly, gold also fell. The precious metal’s reputation as a haven might be overblown considering the influx of retail traders investing in gold via exchange-traded funds, making it vulnerable to pullbacks.
It’s the same story for the stock market. The S&P 500 broke below its 50-day moving average for the first time in 139 trading sessions Monday. While previous dips have looked like rotations away from tech, the worrying sign was that 407 of the index’s constituents fell.
Some concerns look valid. Artificial intelligence investment is increasingly expensive, with the likes of Amazon, Google, Meta, and Microsoft using around 95% of operating cash flows on capital expenditures, buybacks, and dividends. That compares with around 80% in 2019, according to Goldman Sachs. It’s partly why they are having to increasingly turn to debt to fund the data center buildout—Amazon just raised $15 billion from its first U.S. dollar bond offering in three years. AI sentiment will be tested again with Nvidia’s earnings Wednesday.
But ultimately the fate of the AI trade and the wider market lies with the Fed—with the chance it will pause its rate-cutting cycle in December now seen at just over 50%, according to the CME FedWatch tool. Policymakers continue to be divided, with Fed governor Christopher Waller publicly backing a cut while Fed Vice Chair Philip Jefferson preaching caution in remarks on Monday, ahead of September’s delayed jobs report release on Thursday.
The Fed is walking a thin line but it’s likely to come under increased political pressure if the selloff continues, with the Trump
administration eager to install a central bank chair more sympathetic to lowering rates. That could open the door to a significant rebound.
“Never let a good crisis go to waste” is another old saying worth
bearing in mind.
—Adam Clark
***What’s Ahead for Markets in 2026? From “Liberation Day” tariffs to torrid rallies in AI stocks and gold, this year has been full of surprises. Join us on Dec. 11 at noon for discussions with investment strategists and money managers about the outlook for the economy and markets in 2026—and how to position your portfolio for success. Sign up here.
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Crypto Caught in Broad Market Selloff in Risk-Off Move
Crypto was caught in a broad market selloff that dragged everything from Bitcoin to gold to Big Tech stocks lower as investors dumped riskier assets. The selling in stocks was broad, with only two sectors, utilities and communications services, rising. It was the worst three-day stretch for the Dow since April.
- Bitcoin’s price slid below $92,000 and was 16.7% lower than its 200-day moving average for the first time since Dec. 22, 2022, according to Dow Jones Market Data. The proxy for investors’ risk appetite has had a bad stretch after topping $126,000 in October.
- Bitcoin was
falling amid lower expectations that the Federal Reserve will cut interest rates in December. The probability of a quarter-point rate cut is now 42.9%, according to the CME’s FedWatch tool. The selling even hit haven assets such as gold, which fell more than 1% on the spot market.
- Crypto-related companies Strategy and Coinbase Global often offer clues to Bitcoin’s direction. Stocks of both fell on Monday. Strategy, the largest corporate Bitcoin holder, said it purchased 8,178 Bitcoin last week, for $836 million, the most since July.
- Tech stocks, which often trade in tandem with cryptos, also swooned, with the Nasdaq dropping 0.8% to extend losses for another day. It is now down six out of the last eight trading sessions, according to Dow Jones Market Data, and is down more than 4% for the month.
What’s Next: Tech was weaker as investors prepared for earnings from Nvidia, the artificial intelligence chip maker that has often dominated the rally in the sector up until recently. But now investors are worried about valuations and the lasting strength of the AI trade, and whether AI spending will hold up.
—George Glover, Karishma Vanjani, and Janet H. Cho
Food, Restaurant Companies Feeling Relief from Tariff Exemptions
Food companies and restaurants are feeling some relief after the Trump administration exempted hundreds of imported agricultural products from tariffs, ranging from beef to coffee and coconuts. Packaged food makers and
restaurant chains have seen substantially higher input costs in the past few months.
- The Food Industry Association, representing grocers and food wholesalers, said the administration’s exemptions are a critical step to ensure continued adequate supply at prices consumers can afford. The National Restaurant Association also
said it would stabilize supply chains and ease cost-pressures.
- Beverage maker (and Barron’s stock pick) Vita Coco after the latest
exemption that the average tariff rate for its products arriving in the U.S. is expected to decrease from the previously announced 23%, to about 6% based on current sourcing and product mix.
- Chili’s Grill & Bar owner Brinker International said tariffs have boosted commodity costs more than expected in 2025 and started to pinch its profit. The restaurant operator raised prices in October and said it anticipates doing it again in January. The tariff rollback would reduce those cost pressures.
- President Donald Trump spoke about affordability to a group of
