Broadcom's disappointing sales forecast led to an 11% plunge in its stock price, further exacerbating investors' concerns about bets on artificial intelligence. U.S. stocks retreated from record highs last Friday (12/12). Due to the possibility of the Bank of Japan raising interest rates by one notch after its December 19 meeting, which would increase the benchmark rate to 0.75%, this would be the first resumption of the rate-hiking cycle since January. The market is worried about the pressure from unwinding yen carry trades, putting pressure on the cryptocurrency market. Bitcoin (BTC) fell from 93K last Friday, dropping to above 88K this morning. Ethereum (ETH) also fell to above $3,000, with the overall cryptocurrency market capitalization declining 1.8% to $3.02 trillion.

Fed May Only Cut Rates Once Next Year, Broadcom Earnings Trigger Market Sell-Off

Broadcom's disappointing sales forecast caused the chipmaker's stock to plunge 11% and dragged down competitors, further exacerbating investors' concerns about bets on artificial intelligence. U.S. stocks retreated from record highs last Friday (12/12).

The market enthusiasm sparked by the Federal Reserve's third consecutive rate cut was doused by a wave of selling. Additionally, according to the dot plot, Fed officials expect only one rate cut in 2026, which has also left investors puzzled.

Cleveland Federal Reserve President Beth Hammack stated that she leans toward slightly tighter rates to continue applying pressure on still-elevated inflation. Influenced by this news, the U.S. 30-year Treasury yield rose 6 basis points, reaching its highest level in three months.

Kansas City Federal Reserve's Jeff Schmid also pointed out pressures on consumer prices, opposing the Fed's decision to lower rates this time, as inflation remains too high and economic growth momentum is still strong.

Investors Seek Diversification; Banks Remain Bullish on Stocks for Next Year

While tech giants have driven stock market gains for most of this year, concerns over excessive valuations and massive capital expenditures are now prompting investors to look for other opportunities.

Mark Wilson, an analyst at Goldman Sachs, believes that diversification has now become a necessary cost for maintaining adequate equity exposure. He notes that South Korea, Japan, China, and broader emerging markets hold attractive investment opportunities.

Simultaneously, Goldman Sachs expects the stock market to hit new highs next year, supported by strong economic growth and the broader application of artificial intelligence. Other firms, including Morgan Stanley, Deutsche Bank, and RBC, also forecast that U.S. stocks will rise by more than 10%.

Market forecasters are generally bullish on European markets as well; among 17 strategists surveyed by Bloomberg, none expect a significant decline in European stocks.

Crypto Under Pressure: BOJ Hike Fears Send Bitcoin to $88K

Due to the possibility of the Bank of Japan raising interest rates by one notch after its December 18-19 meeting, which would increase the benchmark rate to 0.75%, this would be the first resumption of the rate-hiking cycle since January. The market is worried about the pressure from unwinding yen carry trades, putting pressure on the cryptocurrency market.

Bitcoin fell from 93K last Friday, dropping to above 88K this morning. The 24-hour liquidation amount reached $220 million, with Bitcoin long positions being the majority.

Ethereum also fell to above $3,000, with the overall cryptocurrency market capitalization declining 1.8% to $3.02 trillion.

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