Powell suppresses interest rate cut expectations, U.S. stocks record largest weekly drop in two months, market sentiment falls back

After experiencing a strong rise following the election, market sentiment converged last week. Federal Reserve Chairman Powell seemed to intend to slow down on interest rate cuts, which cooled the excitement bred by "Trump's trade."

According to 4E monitoring, after reaching new highs together on Monday of last week, the three major US stock indices continued to soften. On Friday, expectations for interest rate cuts were drastically reduced causing pressure and an overall decline in US stocks. The S&P 500 index fell by 2% within the past five trading days, wiping out half of its gains since the election. The Dow Jones fell by 1.24% this week and Nasdaq fell by 3.15%, marking its largest weekly drop since September.

Bitcoin broke through $93,000 on Wednesday setting a new historical high before starting to converge but showing resilience under the pullback of U.S stocks; it is currently narrowly fluctuating around $90k mark. As of press time Bitcoin was at $90,799 with nearly a 12% increase over seven days. Other altcoins followed Bitcoin's fluctuations with SOL benefiting from ongoing MEME frenzy demonstrating strong rebound and upward momentum.

In terms of foreign exchange commodities, cooling expectations for Fed rate cuts have led to a continuous strengthening of USD touching its highest level in over a year; Dollar Index rose by 1.6% last week extending gains for seven weeks straight . A strong dollar continues putting pressure on all commodities: spot gold dropped about 4.6% last week marking its biggest single-week drop in three years falling nearly 9.3% from historic highs; WTI crude oil dropped almost 5%, Brent crude oil dropped close to 4%.

The current market focus is centered on inflation concerns after Trump administration took office and more hawkish outlook from Federal Reserve . Powell's speech on Thursday essentially suggested that Fed officials need not rush into cutting rates leading traders slashing their rate cut expectations. The decline in sentiment and uncertainty in monetary policy have increased resistance to market upward movement.