The brief optimism following the end of the US government shutdown quickly faded as markets shifted focus to delayed economic data, uncertainty around Federal Reserve rate cuts, and concerns over high-valuation tech stocks. This triggered a broad sell-off in risk assets.

On Thursday, November 13, all three major US stock indices declined sharply, with the tech-heavy Nasdaq Composite plummeting 2.29%. The risk-off sentiment spilled over into the cryptocurrency market, where Bitcoin fell below the $100,000 mark and Ethereum dropped over 10% at one point.

The immediate catalyst for the sell-off was cautious commentary from multiple Fed officials, signaling hesitation about further rate cuts. According to CME data, market-implied odds of a rate cut plunged from over 70% a week ago to around 50%, intensifying the ongoing market rotation this month. Investors are reportedly taking profits from this year’s top-performing stocks and shifting into lower-valuation, defensive sectors—a trend that played out clearly in Thursday’s trading.

**US Stocks Post Worst Single-Day Drop in a Month** The end of the government shutdown and delayed economic data releases prompted investors to reassess the likelihood of a December Fed rate cut, leading to the steepest one-day decline in a month. Key indices: - S&P 500: Down 1.66% to 6,737.49 - Dow Jones Industrial Average: Down 1.65% to 47,457.22, retreating from record highs - Nasdaq Composite: Down 2.29% to 22,870.36 - Nasdaq 100: Down 2.05% to 24,993.46 - Russell 2000: Down 2.77% to 2,382.98 The CBOE Volatility Index (VIX) surged 14.33% to 20.02, peaking at 21.31 during the session.

**Tech and Chip Stocks Hit Hard** The "Magnificent Seven" tech giants fell 2.26%, with Tesla plunging 6.64% and Nvidia dropping 3.58%. The Philadelphia Semiconductor Index tumbled 3.72%, led by declines in AMD (-4.22%) and TSMC (-2.90%).

**Fed Officials Turn Hawkish, Casting Doubt on Rate Cuts** Several Fed officials voiced concerns about persistent inflation and signaled caution toward further easing: - Cleveland Fed President Hammack (2026 voter) projected inflation would remain above 2% for 2–3 years and stressed maintaining restrictive policy. - Minneapolis Fed President Kashkari opposed last month’s rate cut, citing economic resilience, and remained undecided on December’s move. - St. Louis Fed President Musalem reiterated the need for policy to "hold the line" against inflation.

Even previously dovish officials, like Boston Fed’s Collins and San Francisco Fed’s Daly, now emphasize a higher bar for additional cuts. Collins stated the threshold for further easing is "relatively high," while Daly called it "premature" to decide on December.

**December Meeting: Two Scenarios** The Fed now faces two likely options for December: hold rates steady or cut by 25 basis points. Some analysts suggest the Fed could pair a cut with tighter forward guidance to limit expectations of further easing. Either way, Chair Powell may face more dissent than October’s two opposing votes.

Evercore ISI’s Krishna Guha warned that Collins’ resistance to a December cut "heightens concerns about Powell’s ability to manage FOMC divisions." A split vote seems increasingly probable, with hawks like Schmid potentially backing a hold, while doves like Waller or Bowman could dissent in favor of deeper cuts.

The flood of upcoming data and conflicting Fed signals have left markets in flux, with December’s decision hanging in the balance.