US stocks plummeted, with the Nasdaq 100 giving back most of its gains since the US election results were announced. What happened?

On Friday, U.S. stocks fell sharply, giving back most of the gains since the results of the U.S. election were announced. The Nasdaq 100 index, dominated by tech stocks, performed significantly worse than the overall market, with large tech stocks performing particularly poorly. On Friday, U.S. economic data such as retail sales, New York Fed manufacturing, and import price indices exceeded expectations, serving as important triggers for the sharp drop in U.S. stocks that day: U.S. retail sales remained steady at the beginning of the fourth quarter, with a month-on-month growth rate of 0.4% in October, higher than the expected 0.3%, and the previous value for September was significantly revised upward to 0.8%. The U.S. New York Fed manufacturing index for November was 31.2, higher than the expected 0, and October's was -11.9. The U.S. import price index rose 0.3% month-on-month in October, higher than the expected decline of 0.1%, with the previous value being a decline of 0.4%. The year-on-year increase in the import price index in October was 0.8%, higher than the expected 0.3%. Excluding gasoline, the import price index rose 0.2% month-on-month in October, higher than the expected 0.1%, with the previous value being a rise of 0.2%. Analysts pointed out that the latest U.S. retail sales data may indicate a robust holiday shopping season, in addition to the New York Fed manufacturing index far exceeding expectations and October data. Combined with earlier-than-expected CPI and PPI inflation data this week, the Federal Reserve is likely to remain cautious in further interest rate cuts. After the release of Friday's economic data, the market generally showed a hawkish reaction. During pre-market trading, U.S. stock index futures and U.S. Treasuries were sold off while the U.S. dollar index rose. The likelihood of a 25-basis-point rate cut by the Federal Reserve in December decreased to about 55%, down from 60% before the data were released. After U.S. markets opened, the stock market continued to decline, experiencing heavy selling pressure, while U.S. Treasuries saw a reversal in trend due to escalating risk aversion, leading to strong demand for U.S. bonds and a 1.5% surge in the yen, a clear reversal of Trump trade dynamics in major assets. Federal Reserve officials also poured cold water on the market. On Thursday afternoon U.S. time, Federal Reserve Chairman Powell stated that the U.S. economy is strong and that the Fed does not need to rush to cut interest rates. Labor market indicators have returned to more normal levels consistent with the Fed's full employment target. Inflation will continue to decline towards the 2% target, although there may be fluctuations. The interest rate path is not predetermined and depends on data and economic prospects. If the data tells us to slow down the rate cut, slowing down is the wise thing to do. Congress generally believes that Fed independence is very important, and it is premature to draw conclusions on the policy of the Trump administration. The Fed will act cautiously before a more certain policy is established. On Thursday evening, Boston Fed President Colin Davis, a voting member next year, said in an interview that another rate cut in December is definitely possible but not a foregone conclusion. From now until the December meeting, we will see more data, and we must continue to weigh what is reasonable. The next Fed meeting will be held on December 17-18. Fed officials will see inflation and employment data for November before the meeting. Davis supported the Fed's two rate cuts this year. She said, "We will find a place to move forward more slowly and cautiously." However, Davis is not entirely hawkish in her language. She also stated that there is no evidence that inflation is rising due to the strong U.S. economy, in line with Powell's views. Both believe that recent inflation pressures are a response or catch-up effect to significant price increases in recent years; for example, the rise in car insurance costs reflects the earlier increase in car prices, but car prices have since fallen. Davis believes that continuing to lower rates to a so-called neutral stance is appropriate. Without new evidence of price pressures, maintaining restrictive policies makes no sense, and current policies are still restrictive. Old dynamics may gradually resolve over time in an uneven manner. Nick Timiraos, a well-known financial journalist dubbed the "New Fed News Agency", wrote on Friday that U.S. stocks fell, with the strong performance of the retail sales report released earlier possibly supporting the view that the U.S. economy remains strong and may not need support in the form of interest rate cuts. In addition, some Fed officials have indicated that it is too early to judge whether the Fed should cut rates at the next month's meeting. Timiraos pointed out that the latest situation highlights the uncertainty investors expect, namely whether the Fed can continue to cut interest rates significantly as expected, partly because the U.S. economy continues to maintain good momentum. Quoting Jefferies analyst Thomas Simons' letter to clients after the economic data was released on Friday, Timiraos wrote, "Various speeches by Fed officials suggest that they are increasingly concerned that the cooling of inflation is being hindered. But we believe there is not enough evidence to confirm these assumptions before the next meeting." This article is compiled from "Wall Street News", written by He Hao; Edited by He Yucheng at GMTEight.