Global Markets Faced Turbulence By Midday Wednesday As An Unwinding Of Yen-Dollar Carry Trades Drove Sharp Losses In U.S. Equities

The S&P 500 dipped 0.5% by midday, on track to snap a seven-day winning streak, while small caps in the Russell 2000 remained relatively steady.

Global markets were hit by turbulence on Wednesday midday, as an unwinding of yen-dollar carry trades drove sharp losses in U.S. equities.

The tech-heavy Nasdaq 100 (QQQ ) fell 1.2% in intraday trading, while the S&P 500 (SPY ) dipped 0.5%, on track to snap a seven-day winning streak.

Meanwhile, small caps in the iShares Russell 2000 ETF (IWM ) were holding up relatively well, down just 0.1%.

Rising expectations that the Bank of Japan may raise interest rates in December pushed the dollar-yen pair down by 1.5%, marking its steepest drop since late September.

This triggered a wave of “risk-off” sentiment, pressuring major indices.

Fresh economic data failed to stoke concerns about an imminent change in the Federal Reserve’s interest rate path.

The U.S. economy expanded at an annualized 2.8% in the third quarter, according to a second estimate that matched earlier print.

October’s Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge, also came in line with forecasts, showing a modest uptick.

Traders continue to bet on easier monetary policy, with Fed funds futures pricing in a 70% probability of a 25-basis-point rate cut at the Dec. 18 meeting.

In commodities market, gold inched up by 0.2%, while oil prices fell by 1% to $68 a barrel, heading for a three-day decline.

Natural gas plummeted 7%, amid less cold weather forecasts reducing the outlook for heating demand.

Meanwhile, cryptocurrencies reversed their recent losing streak. Bitcoin (BTC/USD) rallied nearly 5% to above $96,000, while Ethereum (ETH/USD) surged more than 7%, hitting price levels last seen in late June 2024.

Here's how Wednesday's performance in major U.S. indices, ETFs is shaping up, according to Benzinga Pro data: