On Wednesday Eastern Time, the three major U.S. stock indices all declined, with the technology sector being the biggest drag, and the Nasdaq index performing the worst. There was a clear phenomenon of capital rotation in the market—investors are withdrawing from high-valuation tech sectors and shifting to more defensive sectors.

Financial stocks have also been struggling this week. Although this sector has seen good gains since the beginning of 2025, continued pressure this week seems inevitable. The main issues are twofold: first, the market is uneasy about Trump's proposed credit card interest rate cap policy; second, bank quarterly earnings reports have collectively performed mediocre. JPMorgan Chase executives even stated outright that if the interest rate cap is implemented, consumer credit space will be squeezed, and the entire industry's profit margins will decline.

Looking at earnings reports, Wells Fargo's quarterly profit and revenue both fell short of expectations, causing its stock to plummet 4.6%, becoming the main culprit dragging down the broader market. Although Bank of America and Citigroup beat expectations, their stock prices still declined. Analysts generally agree: these earnings figures cannot support the financial sector's valuation, which is already near historic highs.

JonesTrading Chief Market Strategist Michael O'Rourke was quite straightforward: "After a significant rally earlier, it’s normal for the banking sector to take profits now, especially when facing these somewhat mediocre or even slightly flat earnings reports. But on the other hand, the market's optimism about this sector hasn't changed." He added that the credit card interest rate cap may not actually be implemented, but this uncertainty is something bank executives cannot fully eliminate.

On the macro front, the U.S. November PPI increased by 3% year-over-year, exceeding market expectations of 2.7%; core PPI was also up 3% YoY, again higher than expected. From the month-over-month data, the overall PPI rose 0.2%, in line with expectations, but core PPI remained flat, not reaching the expected 0.2% increase.

The latest Federal Reserve Beige Book signals that most regional economies are growing, employment remains generally stable, but inflationary pressures have not fully subsided. This supports the Fed’s stance of maintaining interest rates unchanged in the short term and continuing to observe data trends. The market generally expects that, including the January meeting, the Fed will keep rates steady in the first half of the year, with traders currently anticipating at least two rate cuts within the year.

Additionally, geopolitical uncertainties are also weighing on market risk appetite. The U.S. military withdrew personnel from Uda Air Force Base on Wednesday, and Iran warned that it would retaliate if attacked. Meanwhile, Trump took a hard stance in negotiations over Greenland, claiming that unless Greenland becomes part of the U.S., no outcome is acceptable.