US equities declined on Monday as weakness in cryptocurrencies, renewed pressure on artificial intelligence-linked stocks and rising expectations of a Bank of Japan rate hike unsettled global markets at the start of December trading.
The S&P 500 fell 0.6%, the Nasdaq Composite lost 0.8%, and the Dow Jones Industrial Average dropped 275 points, or 0.6%.
The declines followed a strong week for Wall Street, but extended the volatility that has defined markets through a choppy November.
Bitcoin fell more than 5%, dropping below $87,000. The flagship cryptocurrency slipped under $90,000 late last month and has struggled to regain that level.
Monday’s sell-off reverberated across risk assets, adding to the cautious tone.
The weakness comes after a turbulent November for digital assets and equities alike.
While the Dow and S&P 500 ended the month just modestly above flat, the Nasdaq declined 1.5%, snapping a seven-month winning streak.
At one point, the tech-heavy index was nearly 8% below its October close as investors reassessed sky-high AI stock valuations.
AI stocks stumble again
Nvidia and AMD each lost more than 1%, while Broadcom dropped more than 3%, underscoring continued fragility in the AI trade after several bouts of selling pressure last month.
The sector has faced questions about long-term profitability and slowing momentum after an intense run-up earlier in the year.
One standout was Synopsys, which surged after Nvidia announced an investment in the company, offering a rare bright spot within the semiconductor complex.
December seasonality vs weak start
Despite Monday’s declines, seasonality remains a potential tailwind.
The S&P 500 has historically gained more than 1% on average in December, making it the benchmark’s third-strongest month since 1950, according to the Stock Trader’s Almanac.
Last week’s rebound — the Dow and S&P 500 rose more than 3%, while the Nasdaq jumped nearly 5% — had fueled hopes of a year-end rally.
Traders are now awaiting a series of US economic releases this week, including data on manufacturing, services and consumer sentiment.
The readings will shape expectations ahead of the Federal Reserve’s December 9–10 policy meeting.
Markets currently price in a 93.9% probability of a 25-basis-point rate cut, according to LSEG data.
BOJ signals spark global jitters
Global markets were also pressured by a sharp move in the yen and Japanese government bonds after Bank of Japan Governor Kazuo Ueda said the central bank will weigh the “pros and cons” of raising rates at its next policy meeting.
The comments sent the yen as strong as 155.49 per dollar and pushed the two-year Japanese government bond yield up 2 basis points to its highest level since June 2008.
Japan’s ultra-low rates have long underpinned a popular carry trade strategy in which investors borrow cheaply in yen to deploy capital into higher-yielding, riskier assets.
Even a hint of BOJ tightening can destabilise global markets as traders unwind positions.
As investors absorb the impact of crypto-driven risk aversion, AI-sector weakness and shifting global monetary expectations, Monday’s pullback underscored the fragility of sentiment heading into a pivotal month for central-bank policy and year-end positioning.
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