TechFlow news — Data released on Tuesday, January 8, showed stronger-than-expected U.S. employment figures and accelerating service-sector inflation. These figures significantly dampened market expectations for Federal Reserve rate cuts. Market participants now anticipate that the Fed may cut rates only once this year, fewer than the two cuts projected in the Fed's dot plot.
According to 4E monitoring, after the data release, all three major U.S. stock indices turned negative, erasing earlier brief gains. The S&P 500 closed down 1.11%, the Dow Jones Industrial Average fell 0.42%, while investors took profits in large tech and chip stocks, sending the Nasdaq down nearly 1.9%. Nvidia plunged 6.22% after hitting a new high, and Tesla dropped 4%. Crypto-related stocks Coinbase and MicroStrategy declined over 8% and 9%, respectively.
Amid the broader equity selloff, the crypto market also experienced sharp volatility. Bitcoin dropped sharply in tandem with the U.S. stock market open, falling from above $100,000 to a low of $96,181—a more than 4.8% decline within 24 hours. Prices began recovering slightly in the morning, slowly climbing back above $97,000, but the overall downward trend remains. Ethereum and altcoins fared even worse, with most dropping over 10%, reflecting a significant retreat in market sentiment. On Tuesday, Bitcoin spot ETFs shifted from two consecutive days of substantial net inflows to a net outflow of $544 million—the largest outflow in the past ten days.
Last night’s data confirmed that the U.S. economy is proving stronger than market assumptions. The debate around the Fed's rate path has seemingly shifted—from how many times rates will be cut this year, to whether any cuts will happen at all. Current market pricing indicates over 95% probability of no rate cut in January, with some institutions speculating that rates could remain unchanged until at least July. The Fed may stay on hold throughout the year, and if any easing occurs, it might involve just a single rate cut. Amid such uncertainty, risk assets are broadly under pressure.
