Market Bet on Interest Court amid Technology Fatigue; Gold and Titles Win, Actions Lose Leadership

[Igor Pereira]

The week passed was a test of fire for investors, marked by contradictory signals and a market that fights to find direction in an environment of zero visibility. The delay and cancellation of crucial data left the Fed and Wall Street "flying in the fog", just before the critical decision of December.

By Igor Pereira, Financial Market Analyst, Junior Member WallStreet NYSE

The result was a negative week for the shares (Dow -2%, S&P -2%, Nasdaq -3%), despite a relief rally at the end of the week driven by renewed bets in a Fed interest cut.

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1. Fed Pivot: Weakness-Based Bet, Not Sure

The narrative of the week has changed dramatically with the dissemination of late work data.

• The Catalyst: Although hiring exceeded the forecast, the unemployment rate jumped unexpectedly to a maximum of four years. This "off-duty sign" was enough to reverse market expectations.

• The Reaction: Treasuries' incomes fell, and the dollar weakened as traders aggressively increased betting on an interest cut in December.

• The Divided Fed: The cancellation of the October inflation report (CPI) left the Fed without its GPS. Williams (Fed NY) signaled a cut ("additional adjustment"), while Logan (Dallas) and Collins (Boston) asked for patience. Fed's groping in the dark.

My Analysis (Igor Pereira): The market is betting that the Fed will be forced to cut interest to combat the emerging weakness in the labour market, even without clear inflation data. It's a panic cut, not a victory cut.

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2. Valuation Fatigue: The End of Tech Leadership?

The most worrying sign for the stock market came from its leader: technology.

• Nvidia Failed: Nvidia delivered blockbuster results (as always), but this time, the shares They're down. Almost 6% a week. The market stopped rewarding good news.

• Nasdaq Under Pressure: Nasdaq, driven by the AI, is now 7% below its peak. The euphoria with the AI is finding the reality of stretched evaluations ("valuation fatigue").

My Analysis: When the good news doesn't make the market go up, it's time for caution. The leadership of the technology sector, which carried the S&P 500 all year long, is visibly worn out. The money is looking for other places.

3. Geopolitical rotations and risks

• Tennis Peace: Provisional signs of peace between Russia and Ukraine triggered rapid sector rotations, overthrowing defense actions and sending oil to a month's minimum. Geopolitical volatility remains an unpredictable factor.

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Conclusion of Igor Pereira: The Scenario for the End of the Year

A year-end rally is still possible, but the risk scenario is tightening.

• Contrary Winds: Inequitable consumer, geopolitical instability and values Stretched in tech are tempering optimism.

• Favourable Winds (Gold/Titles): The weakness of the labour market and the bet on the Fed's interest cut are extremely positive for the Treasures and the Gold (XAU/USD), which benefits from the fall in real income and the weaker dollar.

Strategy: The stock market is losing its main engine (tech). "Smart Money" is moving towards security of bonds and gold, anticipating a more docish Fed forced by economic reality. Place yourselves accordingly.

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