US markets saw a mixed trading session on Thursday as the Dow Jones Industrial Average narrowly broke its 10-day losing streak—the longest since 1974. While optimism drove gains earlier in the day, sentiment soured as investors weighed the Federal Reserve’s cautious stance on future rate cuts. Rising Treasury yields and flat performances in the S&P 500 and Nasdaq underscored lingering concerns about the broader economic outlook. Amid heightened volatility, markets navigated a challenging environment shaped by conflicting signals from economic data and corporate earnings.

Key Takeaways:

  • Dow Snaps Record Losing Streak: The Dow Jones Industrial Average added 15.37 points, or 0.04%, to close at 42,342.24, narrowly breaking its 10-day losing streak—the longest since 1974. Despite starting the session with a rally of over 460 points, gains were pared back as the day progressed, weighed down by a rise in the 10-year Treasury yield, reflecting heightened market volatility.
  • S&P 500 and Nasdaq Struggle Amid Volatility: The S&P 500 dipped 0.09% to 5,867.08, while the Nasdaq Composite edged lower by 0.10% to 19,372.77. This marked a continuation of broader market caution following the Federal Reserve’s signal of fewer rate cuts next year.
  • US GDP and Weekly Jobless Claims Beat Expectations: The US economy grew at an annualised rate of 3.1% in Q3, exceeding the previous estimate of 2.9%. Consumer spending, which accounts for two-thirds of economic activity, also saw a stronger revision, rising 3.7%. Meanwhile, weekly jobless claims dropped to 220,000 for the week ending December 14, better than the expected 230,000. Continuing claims nudged lower to 1.874 million, signalling resilience in the labour market despite broader economic uncertainties.
  • European Markets Post Worst Session in Five Weeks: The pan-European Stoxx 600 index dropped 1.51%, marking its sharpest decline since November 12. The FTSE 100 slid 93.79 points, or 1.14%, to 8,105.32, while the DAX fell 273 points, or 1.35%. France’s CAC 40 lost 90 points, or 1.22%, and Italy’s FTSE MIB saw the steepest decline, dropping 614 points, or 1.78%. The Bank of England held interest rates steady at 4.75%, but a dovish split among policymakers, with three voting for a cut, added to market uncertainty. Meanwhile, Sweden’s Riksbank announced a 25-basis-point rate cut. 
  • Asia Markets Hit by Fed Outlook and Recession Concerns: The Nikkei 225 fell 0.69% to close at 38,813.58, and South Korea’s Kospi plunged 1.95% to 2,435.93, reflecting regional pressure from the Fed’s cautious stance. The Hang Seng index declined 0.36%, while Australia’s S&P/ASX 200 dropped 1.7% to 8,168.2. Mainland China’s CSI 300 provided a rare bright spot, edging up slightly by 0.17% to 3,945.46, supported by optimism over potential policy easing in the property sector. Meanwhile, New Zealand officially entered a recession, with its GDP contracting by 1% in the third quarter.
  • Treasury Yields Surge Amid Steady Economic Data: The 10-year Treasury yield rose over seven basis points to 4.57%, marking its second consecutive day above the key 4.5% level. This move followed stronger-than-expected GDP growth in Q3 and a decline in weekly jobless claims. These factors highlighted the resilience of the US economy, reinforcing the Fed’s decision to slow the pace of rate cuts.
  • Oil Prices Decline on Weak Demand Outlook: Brent crude futures fell 51 cents, or 0.69%, to settle at $72.88 per barrel, while US West Texas Intermediate crude dropped 67 cents, or 0.95%, closing at $69.91. The decline came as central banks in the US, Europe, and Asia signalled caution in easing monetary policy, raising concerns about global demand. In China, Sinopec projected that the country’s petroleum consumption will peak in 2027, adding further pressure to oil prices.
  • Volatility Retreats After Historic Surge: The CBOE Volatility Index (VIX), Wall Street’s “fear gauge,” declined over 16% to 23 after surging 74% the previous day, marking the second-largest percentage spike in its history. This came as markets adjusted to the Federal Reserve’s rate outlook, which introduced heightened uncertainty over the economic and monetary policy landscape. The recent pullback in the VIX provided some respite for investors after Wednesday’s dramatic sell-off.

FX Today:

  • EUR/USD Attempts Stabilisation Amid Bearish Momentum: The EUR/USD pair ended the session marginally higher at 1.0368, recovering slightly after sharp declines earlier in the week. The pair remains under pressure, trading well below critical moving averages, including the 50-period SMA at 1.0484. The rejection at 1.0450 earlier in the week highlighted continued selling dominance, with consolidation now around the 1.0360 level. Any further downside could target the psychological support level at 1.0300. Momentum indicators such as the MACD signal ongoing bearish sentiment, while oversold RSI levels suggest a potential technical rebound. Resistance remains at 1.0400, with further gains capped at the 1.0450 region.
  • GBP/USD Breaches Key Support Levels: GBP/USD closed at 1.2505, marking a modest 0.04% decline as the pair struggled to hold above 1.2550—a critical support level. Earlier attempts to reclaim 1.2600 failed, reinforcing bearish sentiment. The breach of 1.2550 now exposes the next support at 1.2480, last tested briefly in late November, with a further drop potentially targeting 1.2400. Sloping moving averages and RSI readings confirm strong selling pressure, though RSI nearing oversold territory suggests limited downside in the short term. On the upside, immediate resistance is seen at 1.2550, with a break above this level required to halt the current bearish trend.
  • USD/JPY Retreats from 158.00 Resistance: USD/JPY ended the day at 157.31, slipping 0.24% after testing the 158.00 resistance level. Despite the broader uptrend supported by rising 50-period and 100-period SMAs at 153.33 and 151.83, respectively, profit-taking by bulls led to a pullback. Key support lies at 156.50, with additional defences at 155.50, aligning with last week’s breakout levels. For the pair to maintain its upward momentum, a sustained break above 158.00 would be required, potentially paving the way for a move toward 159.00. However, momentum indicators suggest bullish exhaustion, pointing to possible consolidation before further upward moves.
  • USD/CAD Consolidates Near Highs Amid Bullish Momentum: USD/CAD closed at 1.4389, gaining 0.08%, as the pair hovered near its recent yearly highs. After breaking through 1.4350 earlier this week, buyers struggled to push beyond the psychological barrier of 1.4450, leading to a temporary pause in its uptrend. The pair remains supported by rising 50-period and 100-period SMAs at 1.4244 and 1.4147, respectively, which signal continued bullish momentum. Immediate resistance is at 1.4450, and a breakout above this level could target the next psychological barrier at 1.4500. On the downside, support is seen at 1.4350, with further protection at 1.4300. Overbought RSI levels suggest near-term consolidation before any significant upward extension.
  • Gold Stabilises Above $2,580 Amid Bearish Pressure: Gold closed at $2,597, recovering by 0.19% after hitting an intraday low of $2,580 earlier in the session. Despite the recovery, the metal remains under pressure, trading below key moving averages, including the 50-period SMA at $2,661 and the 100-period SMA at $2,652. Immediate resistance is seen at $2,610, with stronger barriers near $2,640. On the downside, $2,580 acts as critical support, with a breach likely exposing $2,550. While the RSI indicates oversold conditions, weak momentum suggests any rallies may face significant resistance, keeping the broader bearish trend intact.

Market Movers:

  • Darden Restaurants Soars on Strong Earnings: Shares of Darden Restaurants jumped 14.8%, marking their best day since 2020, after the company reported better-than-expected same-store sales growth at Olive Garden and LongHorn Steakhouse. 
  • Micron Technology Plummets on Weak Outlook: Micron Technology shares tumbled 16.2%, marking their worst day since March 2020, after the company issued weaker-than-expected fiscal second-quarter guidance. 
  • Lamb Weston Dives on Earnings Miss and Leadership Change: Lamb Weston shares plunged 20.1% following disappointing quarterly results and a downward revision to its fiscal 2025 profit guidance. 
  • Palantir Gains on US Army Contract: Palantir Technologies climbed 3.8% after extending its partnership with the US Army in a deal valued at $400.7 million for up to four years. 
  • Innodata Surges on AI Growth Potential: Innodata’s stock skyrocketed 16.3% after Wedbush initiated coverage with an outperform rating, citing the company’s strong position in the custom large language model space within artificial intelligence. 

As the trading day concluded, markets remained on edge amid lingering uncertainties around the Federal Reserve’s cautious outlook on rate cuts and mixed economic signals. The Dow Jones narrowly snapped its 10-day losing streak, but gains were muted as the S&P 500 and Nasdaq Composite struggled to maintain momentum, weighed down by surging Treasury yields. European and Asian markets faced sharp declines, reflecting global spillover effects from the Fed’s revised projections. With the US GDP showing stronger-than-expected growth and weekly jobless claims falling below forecasts, the resilience of the economy added to the complexity of navigating market volatility.