Dow Faces Record Losing Streak While Tech and Pharma Diverge | Daily Market Analysis

Key events:

• UK - CPI (YoY) (Nov)
• Eurozone - CPI (YoY) (Nov)
• USA - Crude Oil Inventories
• USA - FOMC Economic Projections
• USA - FOMC Statement
• USA - Fed Interest Rate Decision
• USA - FOMC Press Conference

The Dow Jones Industrial Average extended its losing streak to nine sessions on Tuesday, marking its longest slide since 1978. This decline, coinciding with the Federal Reserve's final meeting of the year, saw the Dow shed 266 points, or 0.6%. The S&P 500 dropped by 0.4%, while the NASDAQ Composite slid 0.3%. The markets appeared cautious as investors awaited the Fed’s decision, anticipating potential shifts in monetary policy that could shape the economic outlook heading into 2025.

Technology stocks, typically at the forefront of market trends, faced mixed fortunes. NVIDIA Corporation continued to decline, slipping an additional 1% on Tuesday. This marked a deeper retreat into correction territory after the semiconductor giant’s 10% drop from recent highs, reflecting the broader pressures facing the tech sector. Pharmaceuticals also offered a bright spot amid the declines. Pfizer shares surged 4.6% following an announcement that the company expects 2025 profits to align with expectations. The drugmaker highlighted its efforts to rein in costs and reduce debt by divesting non-core assets, aiming to stabilize its financial position after a steep decline in COVID-19-related revenues. These moves were viewed positively by the market, signaling a strategic pivot that could restore investor confidence.

Meanwhile, the Australian Dollar continued to weaken against the US Dollar for the second consecutive session on Wednesday. Traders braced for a potential 25 basis point rate cut by the Federal Reserve, heightening demand for the Greenback. The Australian Dollar also faced headwinds as speculation grew that the Reserve Bank of Australia might adopt an earlier and more aggressive rate-cutting cycle than previously anticipated. National Australia Bank maintained its forecast for the first RBA rate cut in May 2025, while acknowledging the possibility of an earlier adjustment in February.

Labor market data projected unemployment to peak at 4.3% before easing to 4.2% by 2026, and inflation was expected to trend lower, reaching 2.7% by late 2025.

Domestically, Australian consumer confidence took a hit, with Westpac's Consumer Confidence Index declining by 2% in December, erasing gains from the previous two months. Global factors also contributed to market caution, with traders eyeing the upcoming US retail sales data for November, which could provide fresh insights into the state of the world’s largest economy.

The Euro remained stable against the US Dollar, trading near 1.0505 on Wednesday, as investors positioned themselves ahead of the Federal Reserve’s interest rate decision. Market consensus points to a 25 basis point rate cut, potentially bringing the Fed's benchmark range down to 4.25%-4.50%. The focus, however, will be on the Fed’s updated economic projections and rate trajectory, which could provide insights into policy shifts for 2025 and beyond. A more cautious stance from the Fed might bolster the US Dollar against the Euro in the near term.

The European Central Bank continued to signal further rate cuts, with President Christine Lagarde reiterating expectations for additional easing as inflation stabilizes around its 2% target. ECB officials expressed confidence that gradual reductions in borrowing costs would support the Eurozone economy, even as growth indicators remain subdued.

The Canadian Dollar extended its decline against the US Dollar, with USD/CAD trading near 1.4320. The currency faced pressure following dovish remarks from Bank of Canada Governor Tiff Macklem, who emphasized a cautious and data-driven approach to monetary policy. November inflation data showed Canadian consumer prices rising 1.9% annually, slightly below expectations, while core inflation eased to 1.6%, reinforcing the likelihood of a slower rate-cutting pace by the central bank.

The Japanese Yen weakened further against the US Dollar as markets anticipated the Bank of Japan would maintain its dovish stance at the upcoming policy meeting. Japan’s trade deficit narrowed significantly in November, driven by a 3.8% rise in exports amid robust demand from the US and China. However, a similar decline in imports limited the positive impact. Persistent geopolitical tensions and global economic uncertainties offered some support to the Yen as a safe-haven asset, though its gains were capped by expectations of steady BoJ policy.

Amid these global shifts, investor attention remains fixed on central bank decisions and economic data releases that will shape the trajectory of markets in the coming months.