U.S. Financial Markets React to Federal Reserve's Rate Cut Amid AI Challenges

According to PANews, despite the Federal Reserve's anticipated interest rate cut and dovish signals exceeding market expectations, the U.S. financial markets have not uniformly shifted towards risk appetite. Instead, ongoing challenges in the artificial intelligence sector, such as valuation pressures, extended capital expenditure return cycles, and increased uncertainty in profit realization, are influencing market sentiment. This has resulted in a complex divergence in the performance of U.S. stocks and bonds. In the bond market, long-term U.S. Treasury yields have risen this week, with the 10-year yield increasing by about 5 basis points during the typical 'Fed rate cut week.' This counterintuitive trend suggests that the market is not simply pricing the rate cut as the start of comprehensive easing. Instead, it is reassessing inflation persistence, the pressure of U.S. debt supply amid fiscal deficits, and the marginal impact of rate cuts on the real economy and corporate profits. From a pricing perspective, this appears to be an early discounting of the 'effectiveness of easing policies.' The key determinant of market direction remains inflation data. The U.S. November CPI annual rate, core CPI annual rate, month-on-month data, and weekly initial jobless claims, released on Thursday evening, will serve as the core pricing anchors for the dollar and risk assets. With the current CPI still around 3%, significantly above the 2% target, market focus has shifted from 'whether to cut rates' to 'whether rate cuts are reasonable and sustainable.' If CPI data falls significantly below expectations, it will further validate the Fed's current shift towards easing, potentially exerting downward pressure on the dollar and providing some recovery space for risk assets. Conversely, if inflation remains strong or stubborn, the market will reassess the risks of 'premature easing,' possibly leading to a dollar rebound and increased volatility in interest rates and the stock market. Overall, while the Federal Reserve has completed its policy shift, the market is still waiting to see if this shift can truly translate into growth improvement and profit recovery. In the context of cooling AI narratives and high long-term interest rate fluctuations, the market is more likely to repeatedly price around inflation data and policy expectations in the short term, rather than entering a clear unilateral trend.