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The S&P 500 Index closed down 0.99% on Thursday, with the Dow Jones Industrials down 0.23% and the Nasdaq 100 down 1.47%. This decline was influenced by disappointing earnings from major tech companies: Meta Platforms fell over 11%, and Microsoft dropped more than 2%, while Alphabet gained over 2%. December E-mini S&P futures fell 0.95%, and December E-mini Nasdaq futures decreased by 1.37%.
The markets are currently pricing in a 72% chance of a 25 basis point interest rate cut at the Federal Open Market Committee meeting on December 9-10, with a total expected cut of 82 basis points by the end of 2026 from the current federal funds rate of 3.88%. Additionally, the ongoing U.S. government shutdown, now in its fifth week, is impacting market sentiment as it delays significant economic reports and is projected to furlough approximately 640,000 federal workers, which could push unemployment rates to 4.7%.
Overseas markets showed mixed results; the Euro Stoxx 50 closed down 0.12%, while Japan’s Nikkei Index rose 0.04%. In economic indicators, Eurozone Q3 GDP increased by 0.2% quarter-over-quarter and 1.3% year-over-year, outperforming expectations. ECB President Lagarde noted positive impacts from trade relations with the U.S. and progress in China-U.S. relations, while European government bond yields rose, with Germany’s 10-year bund reaching a two-and-a-half-week high of 2.661%.
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