# Japan's Stock Market Bouncing Back—But Don't Celebrate Too Early

The Nikkei 225 is showing some life after a brutal five-day nosedive that wiped out 5.6% (2,710 points). Now hovering around 48,650, the index managed to squeeze out a 0.07% gain yesterday—basically treading water, but hey, not falling is progress.

Here's what's keeping the market from full collapse: Wall Street cracked a smile yesterday. The Dow pumped 1.43%, NASDAQ added 0.67%, and S&P 500 climbed 0.91%. The reason? Fed officials are suddenly sounding dovish, and markets are now pricing in an 82.7% chance of another rate cut next month (up from 50.1% just a week ago). That's a massive shift.

Plus, U.S. economic data is softening—retail sales came in weak, consumer confidence tanked in November, and job losses are accelerating. Normally bad news, but for markets starved for rate cuts, it's music to their ears.

On the Tokyo side, the damage was mixed: Nissan popped 1.24%, while SoftBank got absolutely smashed, dropping 9.95%. Sony stumbled 2.64%, but financial stocks like Mizuho bounced 1.90%.

Oil prices took a hit too—crude fell 1.61% to $57.89 on peace deal optimism between Russia and Ukraine.

Today's wild card: Japan's producer price data and leading economic indicators due out. Producer prices expected to cool to 2.7% YoY from 3.0%, which could signal inflation is finally easing.

Bottom line: The recovery is fragile. One bad data point and we're back to capitulation mode. Watch the Fed closely.