Federal Reserve Chair Jerome Powell's recent comments on trade risks and economic projections have cast a shadow over investor sentiment, despite the Fed's anticipated rate cut. The market's cautious reaction reflects concerns about potential policy changes, including tariffs, which could introduce volatility as companies face cost increases and competitive pressures internationally. The S&P 500 Index, which has been under pressure, saw a natural pullback following a recent surge led by Tesla and the Magnificent Seven. Small-cap stocks, particularly sensitive to interest rates due to their higher leverage, have also been notably affected.
The Direxion Daily S&P 500 Bull 2X Shares (SPUU) experienced a significant decline, dropping 5.31% to $148.65 by 4:00 PM on Wednesday, December 18.