Wall Street: Extreme Volatility After the Purge – Key Market Moves and Fed Uncertainty

• Why Is Wall Street So Volatile Right Now?
• Government Shutdown Ends – What’s Next?
• Fed Rate Cut Uncertainty: Hawkish vs. Dovish Voices
• Trump’s Trade Gambit: Tariff Cuts to Tackle Food Prices
• Tech & AI: Nvidia’s Export Curbs and Apple’s China Boost
• Corporate Spotlight: Walmart’s CEO Transition and Merck’s $9.2B Deal
• Commodities & Crypto: Oil Rises, Gold Slips
• FAQs: Your Burning Questions Answered

Wall Street experienced a rollercoaster session as investors grappled with doubts over the Fed's December rate cuts, AI stock valuations, and the aftermath of a 43-day government shutdown. The S&P 500 barely clawed back into positive territory, while the Nasdaq rebounded from early losses. Meanwhile, new trade deals aim to ease food inflation, and tech giants like Nvidia face export restrictions. Here’s a deep dive into the day’s chaos.

Why Is Wall Street So Volatile Right Now?

Wall Street opened sharply lower but staged a partial recovery, with the S&P 500 edging up 0.05% to 6,741 points after earlier dropping over 1%. The Nasdaq gained 0.42% to 22,965 points, bouncing back from a plunge below 22,500. The Dow Jones, however, lagged, falling 0.64% to 47,153 points. The extreme swings reflect investor skepticism about the Fed’s next move—will they cut rates in December or hold steady? According to CME FedWatch, the odds are nearly split: 49.6% for a 25-basis-point cut vs. 50.4% for no change.

Government Shutdown Ends – What’s Next?

The 43-day government shutdown officially ended after Congress passed a funding bill, signed by President Trump. The deal includes back pay for federal workers and funds key agencies like Agriculture and Veterans Affairs through January 30. Economists warn the shutdown could shave 1.5 percentage points off Q4 GDP growth, though a rebound is expected by early 2026.

Fed Rate Cut Uncertainty: Hawkish vs. Dovish Voices

Minneapolis Fed President Neel Kashkari openly opposed the last rate cut, citing economic resilience. San Francisco’s Mary Daly and Boston’s Susan Collins also expressed caution, while Chicago’s Austan Goolsbee hinted at flexibility. The divide highlights the Fed’s balancing act: inflation remains at 3% (above target), but weak hiring data complicates the picture. As Kashkari put it, "I could argue for a cut or a hold—we’ll see."

Trump’s Trade Gambit: Tariff Cuts to Tackle Food Prices

President TRUMP is set to slash tariffs on beef, bananas, and coffee under new trade frameworks with Argentina, Guatemala, El Salvador, and Ecuador. The move aims to address voter frustration over living costs—a key issue in recent Democratic election wins. The White House hopes retailers will pass savings to consumers, with potential extensions to Swiss watches and chocolate.

Tech & AI: Nvidia’s Export Curbs and Apple’s China Boost

Amazon and Microsoft back the GAIN AI Act, which prioritizes domestic chip orders over exports—potentially squeezing Nvidia’s China sales. Meanwhile, Apple’s iPhone 17 saw a 22% sales jump in China, countering last year’s 5% dip. Google, meanwhile, offered EU concessions to avoid an adtech breakup after its €2.95B antitrust fine.

Corporate Spotlight: Walmart’s CEO Transition and Merck’s $9.2B Deal

Walmart named John Furner as incoming CEO, replacing Doug McMillon in 2026. Merck struck a $9.2B deal for Cidara Therapeutics, betting on its long-acting flu drug. In crypto, American bitcoin (backed by Trump’s sons) surged 5.1%, while Michael Saylor denied rumors of MicroStrategy selling BTC holdings.

Commodities & Crypto: Oil Rises, Gold Slips

WTI crude jumped 2.7% to $60.3/barrel, while gold fell 2.4% to $4,072/oz. Bitcoin corrected to $96,000 amid mixed signals from regulators and institutional players.

FAQs: Your Burning Questions Answered

What caused Wall Street’s volatility?

Doubts over Fed rate cuts, AI stock valuations, and post-shutdown economic Ripple effects.

How will Trump’s tariff cuts impact consumers?

If retailers comply, prices for staples like beef and coffee could drop—but effects may take weeks.

Is the Fed likely to cut rates in December?

Markets are split 50-50, per CME FedWatch. Kashkari’s "wait-and-see" stance mirrors broader uncertainty.