Broadcom's disappointing sales forecast led to a 11% plummet in stock prices, further exacerbating investors' concerns about bets on artificial intelligence, as U.S. stocks fell back from their historical highs last Friday (12/12). Due to the possibility of the Bank of Japan (BOJ) raising interest rates by 25 basis points after the meeting on 12/19, the benchmark rate will be increased to 0.75%, marking the first return to a rate hike cycle since January. The market is worried about the pressure from yen carry trade unwinding, and the cryptocurrency market is under pressure. Bitcoin (BTC) dropped from 93K last Friday to just above 88K this morning, while Ethereum (ETH) also fell to just above 3,000 dollars, with the total cryptocurrency market capitalization down 1.8% to 3.02 trillion dollars.
The Federal Reserve is expected to only cut rates once next year, and Broadcom's earnings report has triggered selling pressure in the market.
Broadcom's disappointing sales forecast caused the chipmaker's stock price to plummet by 11%, dragging down competitors and further exacerbating investor concerns about bets on artificial intelligence. U.S. stocks fell back last Friday (12/12) from historical highs.
(Broadcom's Q4 earnings report exceeded expectations! Secured a $10 billion order from Google TPU, stock price fell back.)
The market enthusiasm sparked by the Federal Reserve's third consecutive rate cut has been extinguished by a wave of selling. Additionally, according to the dot plot, Fed officials expect to cut rates only once in 2026, which has left investors feeling confused.
Cleveland Federal Reserve Bank President Beth Hammack stated that she prefers a slight tightening of interest rates to continue to apply pressure on inflation, which is still too high. Following this news, the U.S. 30-year Treasury yield rose by 6 basis points, reaching a three-month high.
Jeff Schmid of the Kansas City Federal Reserve Bank also pointed out the pressure on consumer prices, opposing the Fed's decision to lower interest rates this time, as inflation remains too high and economic growth momentum is still strong.
Investors are seeking diversification, and investment banks remain optimistic about the stock market next year.
For most of this year, tech giants have led the stock market's rise, but now, concerns about overvaluation and massive capital expenditures have prompted investors to seek other investment opportunities.
Goldman Sachs analyst Mark Wilson believes that diversification has now become a necessary cost to maintain the adequacy of stock investments. South Korea, Japan, China, and broader emerging markets all hold very attractive investment opportunities.
At the same time, Goldman Sachs expects the stock market to reach new highs next year, supported by strong economic growth and broader applications of artificial intelligence. Other firms, including Morgan Stanley, Deutsche Bank, and the Royal Bank of Canada, also predict that the U.S. stock market will rise by over 10%.
Market forecasters generally have a positive outlook on the European market. Among the 17 strategists surveyed by Bloomberg, none expect a significant decline in European stocks.
Due to the absence of recent adverse factors, Ecofi Investissements fund manager Karen Georges stated that many investors are looking forward to a stock market rise during the Christmas period.
Investors are keen to buy stocks that have underperformed this year, making it a good time to diversify their portfolios.
The Bank of Japan may raise rates this week, and Bitcoin has dropped to 88K.
Due to the possibility that the Bank of Japan (BOJ) will raise rates by one notch after the meeting on 12/18~12/19, bringing the benchmark interest rate to 0.75%, this would be the first restoration of the rate hike cycle since January. The market is concerned about yen arbitrage liquidation pressure, and the cryptocurrency market is under pressure.
Bitcoin has dropped from 93K last Friday to just above 88K this morning. The liquidation amount in the last 24 hours reached 220 million dollars, predominantly from Bitcoin longs.
Ethereum has also dropped to just above $3,000, and the total market capitalization of cryptocurrencies has fallen by 1.8% to $3.02 trillion.
This article on the Bank of Japan possibly raising rates this week and Bitcoin dropping to 88K first appeared in Chain News ABMedia.
