Venezuela headlines lift oil and support defensive positioning
US equities closed sharply lower on Wednesday: the S&P 500 fell 1.16%, the Dow slipped 0.47%, and the Nasdaq 100 dropped 1.93%, pushing the S&P 500 and Nasdaq 100 to roughly three-week lows. The selling was led by AI-infrastructure names and chipmakers, which weighed on overall sentiment and triggered a broader risk-off tone. A roughly 2% decline in Bitcoin added pressure to crypto-exposed stocks.
In contrast to the tech selloff, energy stocks advanced as WTI crude climbed more than 1% after President Trump announced an oil blockade on tankers entering and leaving Venezuela. Mining shares also firmed as tensions around Venezuela boosted safe-haven demand for precious metals, with silver surging to a new all-time high.
Fed messaging: dovish Waller vs. slightly hawkish Bostic
Fed Governor Christopher Waller struck a dovish tone, saying the US labor market is “pretty soft,” with close to zero job growth, and that inflation is “pretty well anchored” around 2%. He added that policy rates are still 50–100 basis points above neutral and that the Fed can lower them steadily without rushing.
Atlanta Fed President Raphael Bostic sounded slightly more hawkish, pointing to solid GDP growth and saying he expects it to continue into 2026. He added that in a close call, inflation is more concerning than the labor market.
MBA mortgage applications fell 3.8% in the week ended Dec. 12, with both purchase and refinance activity lower, while the average 30-year fixed mortgage rate rose to 6.38%.
The next catalysts are a busy run of US releases: weekly initial jobless claims, November CPI and core CPI, existing home sales, and the University of Michigan consumer sentiment revision. Markets are pricing about a 24% probability of a 25 bp rate cut at the Jan. 27–28 FOMC meeting.
Rates: Treasuries steady as the curve steepens
March 10-year T-note futures were little changed, while the 10-year yield edged up to about 4.151%. Treasuries faced headwinds from a sharp move in Japanese 10-year yields and from Bostic’s comments, but found support in Waller’s dovish remarks and solid demand at the Treasury’s $13 billion 20-year bond auction.
A steepening yield curve remains a negative backdrop for long-duration bonds, reflecting investor preference for the front end while longer maturities stay pressured by inflation concerns and questions around Fed independence.
European stock markets finished mixed; the Euro Stoxx 50 fell 0.63%. In the euro area, November CPI was revised slightly lower, and Q3 labor cost growth eased. Germany’s IFO business conditions index unexpectedly slipped to 87.6.
In the UK, November CPI eased to 3.2% year over year (core CPI 3.2%), both softer than expected, helping gilts outperform.
Key stock movers: chips and AI infrastructure hit; energy rallies
AI-infrastructure and semiconductor stocks led the downside. GE Vernova fell more than 10% and Constellation Energy dropped more than 6%. ASML, Palantir, Arm, Lam Research, and AMD fell more than 5%, while KLA, Broadcom, and Applied Materials dropped more than 4%. Nvidia, Microchip, Intel, and Micron declined more than 3%.
Crypto-linked names also fell as Bitcoin slid: Marathon Digital and Galaxy Digital dropped more than 6%, while MicroStrategy, Riot Platforms, and Coinbase also retreated.
Energy producers and service firms gained on higher crude: Devon Energy jumped more than 5%, while ConocoPhillips and Occidental rose more than 4%, and Chevron advanced to lead Dow gainers.
Oracle fell more than 5% after reports that Blue Owl Capital will not back a $10 billion deal tied to Oracle’s next data center. Brown-Forman slid after a downgrade. Paramount Skydance fell amid reports Warner Bros. Discovery plans to reject its takeover bid. Texas Pacific Land surged after announcing a strategic agreement with Bolt Data & Energy to develop large-scale data center campuses. General Mills climbed after posting revenue above expectations.
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Twitter: @BigStakeTrades
Twitter: @BigStakeTrades