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. Small-cap stocks, particularly sensitive to interest rates, have been notably affected, and the recent surge led by Tesla and the Magnificent Seven is experiencing a natural pullback. While broader economic indicators remain strong, the uncertainty surrounding trade policies continues to weigh on the market.
The ProShares Ultra S&P500 ETF (SSO) experienced a significant decline, dropping 4.83% to $93.61 by 4:00 PM on Wednesday, December 18.