This past week saw a bruising end on Wall Street, with the Nasdaq and S&P suffering their worst day of the year, and the Nasdaq alone dropping over 4%. This decline was part of a broader selloff that also impacted bonds, Bitcoin, and metals, as growing concerns surrounding artificial intelligence and the increasing likelihood of a Federal Reserve rate hike rattled investor confidence. Chip stocks were a significant driver of this downturn, with Broadcom's stock plunging 12% after a disappointing outlook despite high AI demand.
In other news, Bitcoin tumbled below $60,000 for the first time since 2024. Bond yields surged as economists revised their predictions for the Federal Reserve's next move, with a rate hike now appearing all but inevitable. Analysts predict that a rate increase could lead to a significant blow to the U.S. GDP, estimated at around 1.5%.
President Trump is set to meet with major AI executives next week to discuss a new public-private partnership. He has suggested the government could take equity stakes in leading AI companies, a concept that has sparked debate, with his former AI adviser reportedly against it. Trump also addressed reports of a government-run wealth fund that would redistribute AI gains to the public, stating it would "make them rich." This comes ahead of several trillion-dollar initial public offerings from AI companies, with one reportedly having already received orders for more than its available shares in a $75 billion IPO. Meanwhile, hiring remains strong, with an average of 188,000 new jobs per month over the past three months, and the black unemployment rate hit its lowest level in a year, though wage growth at 3.4% is the lowest in five years.
