Overall US Stock Market Plunge — A Total Crisis

Overnight, the US stock market dropped more sharply than expected, facing a total crisis. The spread of interest rate cut skepticism, caution over Nvidia’s earnings, and concerns over employment data collectively affected the market. The Dow Jones dropped over 700 points intraday but partially recovered at the end of trading.

Trump’s Bond Purchases Controversy — Serious Conflict of Interest

It was revealed that President Trump purchased bonds of certain policy-beneficiary companies like Intel and Meta on a large scale, sparking a conflict of interest controversy. This could be considered stock manipulation, price adjustment, insider trading, or pre-trade suspicion under the Capital Markets Act.

President Trump purchased $82 million worth of corporate and municipal bonds in Q3, and at least $103.7 million in August. In particular, the fact that there is not a single record of selling raises further questions.

Fading Rate Cut Expectations — Fed Officials Take Hawkish Stance

According to CME FedWatch, the probability of a December rate pause rose to 57%. Key Fed officials like Vice Chair Jefferson, President Kashkari, and President Daly repeatedly emphasized skepticism toward rate cuts.

Presidents Collins and Goolsby also stressed the need to maintain rates due to inflation exceeding the 2% target. This negative sentiment, combined with hedge fund short-selling and retail sell-offs, is pulling down the indices.

AI Bubble Debate and Wall Street Outlook

While concerns about an AI bubble are rising on Wall Street, some global investment banks are raising their S&P 500 forecasts. Notable skeptic Mike Wilson raised the S&P 500 target from 6,374 → 7,800.

He cited stronger pricing power, AI efficiency, regulatory easing, and stable interest rates as reasons, and Goldman Sachs also noted that AI infrastructure companies outperformed the S&P by 27%.

On the other hand, RBC warned of retail investor fatigue, analyzing that recent sell-offs by individual investors, not short squeezes, contributed to declines in small and mid-cap stocks.

Individual Stock Issues — Alphabet and Amazon

Despite the tough market, Alphabet was the only stock showing strength. Berkshire Hathaway holds 17.8 million shares of Alphabet common stock ($4.33B), ranking it 10th in its portfolio.

Alphabet reached an all-time high of $293, and considering the market situation, buying at low prices and holding is still seen as a valid strategy.

Meanwhile, Jeff Bezos of Amazon announced a full return to management after a long absence and established a physics-based AI startup called ‘Project Prometheus’. Blue Origin also successfully launched a Mars exploration rocket, creating a competitive dynamic with SpaceX.

Amazon saw a gap-up after earnings but returned gains due to corporate bond issuance issues. However, the low-cost buying perspective remains valid for long-term growth.