Data Above Expectations

• U.S. Initial Jobless Claims: 224K (Forecast: 225K, Previous: 226K)

• Annual PPI: 3.3% (Forecast: 2.5%, Previous: 2.3%)

• Monthly PPI: 0.9% (Forecast: 0.2%, Previous: 0.0%)

The fact that both annual and monthly PPI came in significantly higher than expected has reinforced the market perception that “inflation is still not under control.”

Decline in Rate Cut Probabilities

According to Polymarket data, rate cut probabilities for the September 17, 2025 FOMC meeting are as follows:

• 50+ bps cut: 5%

• 25 bps cut: 75%

• No change: 19%

These figures show that after the PPI release, the likelihood of a strong 50 basis point cut has weakened considerably, creating a more cautious outlook in the markets.

Sharp Drop in Bitcoin

This negative macroeconomic sentiment also spilled over into Bitcoin prices. The leading cryptocurrency fell 3.51%, dropping below $119,000. Rising inflation data and the decreased likelihood of a more dovish Fed stance have increased selling pressure on risk assets.

Short-term market volatility is expected to continue, with investors closely monitoring both inflation indicators and statements from Fed officials.

$1.05 Billion in Positions Liquidated in the Last 24 Hours!

In the past 24 hours, heightened volatility in the crypto market has led to more than $1.05 billion in liquidations. Of this, $781.97 million came from long positions and $270.19 million from short positions. This highlights the severe losses for leveraged traders and the sharp moves occurring in both directions.

U.S. Stocks Open Lower!

U.S. equities started the day slightly in the red. At the open, the Dow Jones index was down 0.07%, the S&P 500 fell 0.30%, and the tech-heavy Nasdaq slipped 0.31%. This weak opening reflects investors’ cautious stance regarding economic data and rate cut expectations.

This content is for informational purposes only and does not constitute investment advice. Markets carry high risks, and you should always conduct your own research before making investment decisions.

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Bank of America Market Analysis 

In a note dated May 8, Michael Hartnett stated that the rally surged in the second quarter due to tariff optimism. However, this recovery has now ended. Investors are following a “buy the rumor, sell the fact” strategy. Although the S&P 500 rose 14% after Trump’s tariff pause announcement on April 9, it is down 3.7% for the year. 

Hartnett believes U.S. stocks are in a “late-stage structural bear market.” For this reason, he recommends bonds and international markets over stocks. Foreign markets are outperforming the U.S. 

Bank of America Data and Investor Movements 

Bank of America’s data shows that $24.8 billion has flowed out of U.S. stocks over the past four weeks. This figure, sourced from EPFR Global, marks the largest outflow in two years. Investors are uncertain about the market’s future. This aligns with Hartnett’s warning that the rally is over. 

Still, there are some market movements. Trump’s consideration of tariff cuts during weekend talks with China sparked a short-term rise in indices. The Dow Jones rose 0.6%, the S&P 500 gained 0.6%, and the Nasdaq climbed 1.1%. However, futures remained nearly flat on Friday morning. 

Trump announced a trade framework with the UK. This is the first deal under the U.S.’s “reciprocal tariff” policy. The UK faces a 10% base tariff. Chris Zaccarelli of Northlight Asset Management calls this deal a “test run.” Agreements with China and other major trade partners will be more critical. 

Meanwhile, Trump’s optimism about China talks has* sparked market activity. However, investors remain cautious. Large bets are not being placed in futures. The S&P 500 is set to close the week with a 0.4% loss. The Nasdaq is down 0.3%, while the Dow is up 0.1%, marking its third positive week. 

The market is awaiting the outcome of Trump’s China talks. Reuters reports that tariff negotiations with China are at a critical stage this weekend. If a deal is reached, it could spark new market activity. According to The Wall Street Journal, investors are avoiding risks due to long-term uncertainties. 

In conclusion, Bank of America’s warning and investors’ cash withdrawals indicate that the stock market rally has stalled. Hartnett’s recommendation to shift to bonds and international markets may offer investors a new roadmap. 

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What Did Powell Say?

Jerome Powell used both cautious and warning tones in his speech. The following statements were particularly striking:

• “The economic impact of tariffs is likely to be greater than expected.”
  This statement raised concerns that the recent rise in U.S. trade policies and signals of a more closed economy could cause more damage than anticipated.
• “Despite uncertainties, the U.S. economy remains resilient.”
  Although this may seem like a positive remark, investors focused on the emphasis on “uncertainties.”
• “We are not in a hurry to cut rates.”
  The market had been expecting a rate cut this year. However, these words disappointed investors hoping for near-term monetary easing.
• “If the Fed’s authorities come into conflict, we might face a difficult decision.”
  This statement reinforced the perception of growing internal disagreements or political pressure within the Fed.
• “Automakers’ supply chains will likely be disrupted for years.”
  This signaled that supply-side problems would persist, potentially making inflation more permanent.

Powell Spoke, Markets Reacted

Investors began pricing in more economic fragility alongside the Fed’s cautious stance. Powell’s remarks once again showed us that every word from a central bank chairman can trigger trillion-dollar swings in the markets.

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U.S. Stocks Suffered Their Worst Drop Since 2020

On Thursday, the Dow Jones Industrial Average dropped by 1,679 points (4%), while the tech-heavy Nasdaq lost 6% and the S&P 500 fell by 4.8%. Significant drops in the stocks of major companies like Nvidia, Apple, and Amazon deepened the losses in Nasdaq.

The dollar also faced intense selling pressure, with the WSJ Dollar Index falling by 1.3%, hitting its lowest level since October. This decline raised concerns about the U.S. economy’s growth outlook.

Trade Wars and Recession Fears

After the announcement of new tariffs, JPMorgan raised the likelihood of the U.S. entering a recession to 60%. Europe and Canada quickly started retaliatory plans. French President Emmanuel Macron stated that the EU might take action against U.S. tech companies, while Canadian Prime Minister Mark Carney announced a 25% tariff on U.S. automobiles in response to Trump’s car tariffs.

Markets Continue Volatile Trend

Despite the market turmoil, Trump argued that the tariffs would benefit the U.S. economy in the long term. “The markets are going to boom,” Trump said, adding that he could impose new tariffs on sectors such as pharmaceuticals and semiconductors.

During this period, oil prices fell by over 6%, while gold investors sold off after its recent rise. Investors warn that volatility in the stock market may persist, and the impact of trade wars could be felt more strongly in the coming months.

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