Stocks Drop as the Fed Stays Hawkish and Meta Plunges 12%

Wall Street paused its powerful rally on Thursday after the Federal Reserve dialed back expectations for a December rate cut, while Meta Platforms Inc. sank 12% as the company announced plans to take on new debt to support its artificial intelligence expansion.

‍

After a string of record highs in October, stocks finally took a step back. The S&P 500 remains on track for its longest run of monthly gains in four years, but the momentum showed signs of cooling.

‍

Even news of a one-year trade truce between the U.S. and China wasn’t enough to lift sentiment, as investors largely viewed the deal as already baked into prices. Meanwhile, Treasury yields pushed higher and the dollar strengthened, with money markets scaling back bets on near-term policy easing.

‍

The day’s moves suggested that the market’s remarkable surge may be due for a short pause. Analysts have been warning about stretched valuations and narrowing market leadership in recent sessions, raising caution flags among traders.

‍

“None of this necessarily signals the end of the AI boom or a major stock market reversal,” said Matt Maley of Miller Tabak. “But it does increase the likelihood that we’ll see a short-term correction soon.”

‍

Market Overview:

Stocks
‍The S&P 500 slipped 0.6% as of 9:30 a.m. in New York, while the Nasdaq 100 lost 0.7% and the Dow Jones Industrial Average dropped 0.4%. Europe’s Stoxx 600 declined 0.6%, and the MSCI World Index fell 0.7%. The Magnificent 7 Total Return Index tumbled 1.6%, and the small-cap Russell 2000 slid 0.7%. Meta’s 12% plunge was the day’s standout move.

‍

Currencies
‍The Dollar Spot Index rose 0.4% as the greenback strengthened across major peers. The euro dropped 0.3% to $1.1570, the British pound weakened 0.4% to $1.3138, and the Japanese yen depreciated 1% to 154.31 per dollar.

‍

Cryptocurrencies
‍The crypto market joined the risk-off tone. Bitcoin declined 2.7% to $108,481.76, while Ether slid 3.4% to $3,817.62.

‍

Bonds
‍Treasury yields edged higher, with the 10-year note climbing three basis points to 4.11%. The 2-year yield also rose three basis points to 3.63%, and the 30-year yield moved up to 4.66%. In Europe, Germany’s 10-year yield increased to 2.66%, and the U.K.’s 10-year gilt yield advanced to 4.45%.

‍

Commodities
‍In commodities, oil prices dipped and gold gained. West Texas Intermediate crude dropped 0.8% to $59.97 a barrel, while spot gold advanced 1% to $3,969.55 an ounce.

‍

The broader picture shows investors adjusting their positions after weeks of strong gains fueled by AI optimism and easing inflation data. The Fed’s cautious tone reminded traders that policymakers remain data-dependent and are not yet ready to commit to rate cuts.

‍

Meta’s steep drop also underscored growing investor concern about how major tech firms are financing their AI ambitions. The company’s decision to raise debt to fund its massive AI infrastructure buildout highlights both the scale of its commitment and the financial strain such projects can impose.

‍

Despite the day’s pullback, many analysts remain optimistic about the longer-term outlook. With corporate earnings largely exceeding expectations and the economy showing resilience, investors continue to see opportunities especially in sectors tied to AI, semiconductors, and cloud computing.

‍

Still, market veterans caution that the road ahead could be bumpier. Elevated valuations mean that even modest disappointments in data or earnings could trigger sharper reactions. Combined with the Fed’s hesitancy to signal aggressive easing, volatility may persist through year-end.

‍

In short, Thursday’s session served as a reminder that even in a powerful bull market, pauses are part of the process. The Fed’s measured stance and Meta’s AI funding move gave traders reasons to take profits and reassess. But with the S&P 500 still riding a multi-month winning streak and broader optimism around AI innovation intact, few see this as more than a healthy reset in an otherwise strong market narrative.

‍