Good News Bad News Again as Weak Data Fuels Rate Cut Hopes

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Good News Bad News Again as Weak Data Fuels Rate Cut Hopes
Silver Spot US DollarS&P 500AEX
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Nvidia vs. Broadcom: Which AI chip stock to own for 2026? Analyst answersGet 100% ad-free experienceare moving higher modestly this morning, while the S&P, NASDAQ, and Magnificent 7 are headed the other direction.

Doubts about the viability of the practicality of the aggressive buildout plans for massive AI data centers continue. The concerns include financing, power and water supply, and even community acceptance. Besides tech being down 1% in the last month, utilities are down 3%. These fears of delays cloud the existing uncertainty of the timing of the profitable return on the massive AI investment on the table. It also highlights the impact of the very high weight of mega tech in the S&P index. But believe it or not, revenue and earnings are forecasted to accelerate in 2026 due to higher guidance, especially from the data center companies that have a growing order backlog. In the bigger picture, the positive momentum of non-tech names is very positive for the health of the market, giving confidence to the prospects for 2026. YTD, the only sector in the red is real estate , and for LTM is real estate and consumer staples . YTD, the only sectors returning +20% remain tech and communication services , which are also the only sectors +15% LTM. Tech is under pressure but still outperforming.will continue to reduce Fed Funds anytime soon. This is complicated by the still somewhat delayed data on employment and inflation. Today, Fed governor Waller expressed little concern aboutbut saw labor as weakening. He thought rates should be as much as 1% lower under current conditions. If that were to transpire in early ’26, it would be very positive for equities. This leaves us in another situation where bad news is good news, where weak job data brings confidence of further rate cuts sooner, while raising recession fears at the same time. Today, the 2-year is up 2 bps to 3.5%.is flat. Hopes remain for a Santa Claus rally, which is defined as the last 5 trading days of the year and the first 2 days of January, where institutional traders have largely completed their window dressing for year-end portfolios. The 2026 outlook still remains strong.Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks. Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes.and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website. It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

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