Corporate Performance - Nike (NKE) shares declined in premarket trading due to ongoing weakness in the China market, despite exceeding Wall Street's revenue projections [6] - Oracle (ORCL) stock increased after China's ByteDance signed agreements to establish a TikTok joint venture [6] Economic Indicators - The Consumer Price Index indicated a significant cooling of inflation, which has positively influenced Wall Street's sentiment [2] - A weakening job market has led to renewed expectations that the Federal Reserve may continue its easing policy, with traders betting on potential rate cuts next year [3] Market Trends - The S&P 500 and Nasdaq Composite are both down nearly 1% for the week, reflecting a broader rotation out of tech stocks [5] - Despite a recent rally, stocks are facing notable losses in the last full week of trading for 2025 [5]

Core Insights - US inflation slowed more than expected in November, with the headline Consumer Price Index (CPI) rising 2.7% year over year, below market expectations of 3.1% [1] - Core CPI, excluding food and energy, increased 2.6% year over year, also missing forecasts of 3.0%, indicating a notable deceleration in price pressures [2] Market Implications - The softer-than-expected inflation data suggests that inflation is cooling faster than anticipated, which may lead to a shift in Federal Reserve policy towards a more accommodative stance sooner than previously expected [3] - Markets are likely to interpret the data as supportive of rate cuts, particularly for early 2026, as lower inflation reduces pressure on real yields and the US dollar, benefiting risk assets [4] Crypto Market Reaction - A downside inflation surprise typically acts as a macro tailwind for the crypto market, improving liquidity conditions and risk appetite [5] - Short-term price action in the crypto market will depend on how quickly markets adjust Fed policy expectations and whether follow-through buying occurs after the initial reaction [5]

Market Overview - The Dow Jones Industrial Average fell by more than 300 points, or 0.7%, amid concerns over an AI bubble and uncertainty regarding Federal Reserve rate cuts [1] - The S&P 500 and Nasdaq also experienced declines of 0.3% and 0.6%, respectively, marking a continuation of a tech sector downturn into its third week [1] Company Performance - Nvidia's shares decreased by 1.5% ahead of its third-quarter earnings report, reflecting broader market fears about overvaluation in AI stocks [2] - Major tech companies such as Amazon, Microsoft, and Meta saw significant drops in their stock prices, with declines of 3.8%, 3%, and 1.1%, respectively [3] - Home Depot's shares plummeted by 3.8% after the company lowered its full-year profit forecast and missed earnings estimates due to inflation affecting consumer spending [15] AI Sector Insights - Concerns about an AI bubble are growing, with comparisons being made to the dot-com bubble of the late 1990s and early 2000s [2][3] - Alphabet's CEO Sundar Pichai acknowledged "irrationality" in the current AI boom, suggesting that no company, including Alphabet, would be immune if the bubble were to burst [11][14] Federal Reserve and Economic Indicators - The likelihood of a quarter-point rate cut at the Federal Reserve's December meeting has dropped to just over 50%, down from more than 90% the previous month [8] - Investors are awaiting key economic data releases, including the delayed September jobs report, which could influence the Fed's decision-making [9] Strategic Partnerships - Anthropic announced plans to purchase $30 billion of Azure compute capacity from Microsoft, with Microsoft investing $5 billion and Nvidia contributing $10 billion to the startup [10]