Stock Market and Crypto Drop as Rate Cut Hopes Fade – What’s Next?

TLDR

• US stock futures remained mostly flat on Friday after major indexes posted their worst single-day losses in over a month, led by heavy declines in tech stocks like Nvidia and Broadcom
• Bitcoin fell below $100,000 for the first time in weeks, dropping 6.5% to $96,968 as the cryptocurrency lost over $450 billion in value since early October
• Traders now see only a 52% chance of a Federal Reserve rate cut in December, down from 63% the previous day and over 95% a month ago
• Applied Materials warned that spending on chipmaking equipment in China will decline next year due to stricter US export controls, with fiscal 2026 revenue facing a $600 million hit
• Weekly jobless claims dropped to around 227,543 according to state-level data, though the decrease was not large enough to strengthen the case for a December rate cut

US stock markets struggled to find direction on Friday morning after experiencing their steepest sell-off in over a month. Futures contracts showed minimal movement, with Dow Jones Industrial Average and S&P 500 futures hovering near flat. Nasdaq 100 futures declined 0.1% in early trading.

The previous trading session saw all major indexes post their largest one-day losses since October 10. The Dow erased gains that had pushed it above 48,000 for the first time. The Nasdaq Composite led the decline as major technology companies tumbled.

Nvidia, Broadcom, and Tesla all posted sharp losses on Thursday. Oracle has now lost more than one-third of its value since September. Analysts at Vital Knowledge noted that investors appeared to be abandoning hopes for a year-end rally in tech stocks.

Uncertainty about the Federal Reserve’s December policy decision has emerged as a key concern for investors. The probability of a quarter-point rate cut next month has dropped to approximately 52%. This marks a sharp decline from 63% just one day earlier and over 95% a month ago.

Fed Officials Signal Caution on Rate Cuts

Several Federal Reserve officials have delivered more cautious commentary in recent days. Federal Reserve Bank of Minneapolis President Neel Kashkari said recent economic data has shown continued resilience. He suggested a rate hold could be the best option, though he acknowledged he could make a case for either decision.

The Fed cut interest rates by 25 basis points at its last two meetings in October and September. These cuts were designed to support a slowing labor market. CME’s FedWatch Tool currently shows roughly even odds for another reduction next month.

Weekly jobless claims data from state-level filings showed a small decrease last week. Applications for unemployment benefits fell to approximately 227,543 in the week ended November 8. The previous week’s figure stood at 228,899.

The drop in claims was not considered large enough to boost the case for a December rate cut. Calculations from Haver Analytics and Bloomberg News put the claims between 226,000 and 227,543. Normal weekly filings from the Bureau of Labor Statistics have not been published due to the recent government shutdown.

Crypto Markets Face Pressure

Bitcoin dropped below $100,000 on Friday, continuing a broader decline in risk-driven markets. The world’s largest cryptocurrency was trading at $96,968 after falling 6.5%. The token has lost more than $450 billion in value since early October.

Bitcoin is on track for its third consecutive weekly decline. Flows into the digital asset from large investment funds, exchange-traded funds, and corporate treasuries have shown signs of slowing. The drop comes as broader market sentiment weakens on rate uncertainty and tech stock losses.

Chip Equipment Maker Warns on China Revenue

Applied Materials issued a warning about weakening spending on chipmaking equipment in China. The company said expenditures in the region are expected to decline next year due to more restrictive US export controls. Applied Materials reported that $110 million of goods were not shipped during its fiscal fourth quarter because of restrictions.

The restrictions were later suspended following a meeting between US President Donald Trump and Chinese President Xi Jinping last month. The company previously stated its fiscal 2026 revenue faces a $600 million impact from expanded US restrictions on exports of advanced chip equipment to China. Applied Materials noted that increased AI business spending may drive higher sales of its semiconductor equipment in the second half of next year.

Chinese factory output data released Friday showed industrial production grew 4.9% year-over-year in October. The figure fell short of expectations for 5.5% growth and was down from 6.5% in the previous month.

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