Global stocks faced a sharp decline on Friday, with selling pressure persisting in U.S. markets as concerns grew over the Federal Reserve potentially adopting a more hawkish policy stance, prompting investors to continue retreating from risk assets. Major global indices, including those in Tokyo, Paris, and London, fell across the board, with the U.K. market under additional pressure due to new uncertainties surrounding the upcoming budget announcement.

As of the latest update, Dow futures dropped 0.58%, S&P 500 futures fell 1.00%, and Nasdaq futures slid 1.49%.

European markets also declined on Friday, as worries about an AI bubble and the global economy shook investor confidence. The pan-European Stoxx 600 index dropped 1.9%, with major indices broadly lower.

The U.K. market experienced heightened volatility, with the pound swinging sharply amid budget-related reports. U.K. government bonds faced selling pressure after Chancellor Rachel Reeves scrapped plans to raise income tax rates in the upcoming budget, raising questions about how the revenue shortfall would be addressed. Market sentiment later stabilized slightly after sources indicated improved economic forecasts, but the 10-year gilt yield remained elevated at 4.50%, up 6 basis points. The pound pared some losses.

U.S. stock futures pointed to a lower open, with tech stocks expected to lead declines again. Nasdaq 100 futures fell 1.5%, following a more than 2% drop in the previous session as doubts over a rate cut next month reignited concerns about stretched tech valuations.

**Fed’s Hawkish Tone Weighs on Markets** Growing caution among Fed officials about further easing, amid persistent inflation and a resilient labor market following two rate cuts this year, has dampened market sentiment.

Markets now price in just a 49% chance of a 25-basis-point Fed rate cut in December, down from slightly above 60% earlier this week. Delayed economic data due to the U.S. government shutdown and debates over AI-driven tech valuation bubbles have further strained financial market sentiment.

Traders sharply reduced bets on a third consecutive rate cut after multiple Fed officials expressed skepticism, citing stronger-than-expected economic resilience and inflation uncertainty post-shutdown. The probability of a December cut now stands below 50%, though some policymakers remain uneasy about emerging labor market softness.

A month ago, markets had almost fully priced in a December cut. Three Fed officials, including voting member Jeffrey Schmid, are scheduled to speak Friday.

Jeremy Stretch, CIBC’s G10 FX strategy head, noted, “Markets are in wait-and-see mode ahead of delayed data releases. We’re back to a coin toss on December cuts, while AI bubble fears further sour sentiment.”

Market sentiment has shifted notably this month, with high-flying tech stocks like Palantir and Oracle dropping about 15% over two weeks, while chip giant Nvidia fell nearly 8%. The White House added to concerns, suggesting October unemployment data might never be released, reinforcing views that the Fed needs clearer signals before acting.

Arnaud Girod, Kepler Cheuvreux’s head of economics and cross-asset strategy, said, “Market anxiety is palpable and multi-directional. Any Fed pushback on rate-cut expectations would be bad news. Without sufficient data, they’re unlikely to cut.”

**Safe-Haven Flows Lift Treasuries** The MSCI Asia ex-Japan index fell nearly 2%, Japan’s Nikkei dropped 1.8%, and South Korean stocks plunged 3.8%. Mark Ellis, Nutshell Asset Management’s CIO, remarked, “Globally, stocks are just back to levels from days ago. But there’s clear selling pressure, especially in high-beta tech stocks that outperformed this year.”

Safe-haven demand lifted Treasuries. The two-year yield dipped to 3.58% after a 3-basis-point rise overnight, while the 10-year yield edged up 1.4 basis points to 4.12%.

The dollar index slipped to 99.19, set for a weekly loss. The yen strengthened to 154.48 per dollar after hitting a nine-month low, while the Swiss franc rose 0.3% against the dollar. Bitcoin slid to a six-month low.

Oil prices climbed after Ukrainian drone strikes damaged a Russian oil depot, with Brent crude futures up 1% to $63.65. Spot gold held steady at $4,173/oz after a 0.6% drop ended a four-day rally, though prices remain well below the record high of $4,381.

**Wall Street Warns of “Credit Cockroaches”** Allianz chief economic advisor Mohamed El-Erian issued a stark warning about evolving global economic risks and the AI frenzy.

He cautioned that while the foundational system remains intact, investors should brace for significant individual losses in AI and a wave of “credit accidents.” El-Erian, who collaborated with Nobel laureate Michael Spence to assess the AI boom, concluded markets are in a “rational bubble”—justifiable given AI’s vast potential but shadowed by inevitable tears and losses.

**Hedge Funds Dump Stocks as Retail Investors Prop Up Rally** Per BofA’s latest client flow data, hedge funds and institutional clients were the largest net sellers of stocks and ETFs in 2025, offloading over $67 billion.

In early November, hedge funds recorded their biggest tech sell-off in two years amid valuation concerns, while retail investors repeatedly stepped in to sustain mega-cap tech and speculative sectors. However, BofA noted early signs of waning retail enthusiasm after the prolonged rally.

**Key Stocks in Focus** Several high-profile stocks fell pre-market: Nvidia dropped 3.3%, Alphabet slid 2.7%, Broadcom declined 2.5%, and TSMC fell 3.4%.

Bitcoin-linked stocks also dipped as Bitcoin hit a six-month low: Riot Platforms fell 2.4%, Hut 8 Mining dropped 3.7%, and Mara Holdings lost 1.3%.

Tesla slid 4.3%, falling below $400 and turning negative for the year—now the only “Magnificent Seven” stock in the red for 2025.

CoreWeave extended losses, down over 2% pre-market after being labeled the “epicenter of the AI bubble” by U.S. media.

Walmart tumbled 2.5% as CEO Douglas McMillon announced his departure.

Warner Bros Discovery rose 3.3% on reports of bidding interest from Paramount, Comcast, and Netflix.

Bilibili gained 3.3% after strong Q3 ad growth and bullish analyst ratings.

WeRide advanced over 1% on expectations of overseas commercialization breakthroughs.

Tencent Music rose 1.34% as Citigroup reiterated a “buy” rating.

Beike climbed over 1% post-earnings as multiple brokers raised price targets.