As of press release, the three major indices had mixed ups and downs. The Dow rose 0.36%, the NASDAQ fell 0.38%, and the S&P 500 rose 0.02%.

The sudden escalation of tension in the Middle East has strained market sentiment. On Friday morning, the CBOE Volatility Index (VIX, also known as the Panic Index), which measures the extent of fear in the US stock market, once broke through 19.

Geopolitical tension in the Middle East draws attention

Iran's Fars News Agency reported on the 19th local time that explosions were heard in the Kajavaristan region of Isfahan province in central Iran. Meanwhile, an American official confirmed to the media that Israel launched a missile in the early morning of the 19th to launch a retaliatory attack on Iran. US officials said that Israel's retaliatory attack was “limited.”

According to reports, after Israel carried out a limited strike on Iran, Israel is currently “evaluating the effectiveness of this air strike and the damage it caused (to Iran).”

Oil prices once soared more than 3% in early Asian trading. Brent crude oil futures, which is the global benchmark oil price, broke through $90 per barrel, but since then they have regained these gains and declined slightly.

US stocks recently pulled back, analysts say there will be a wave of sell-off in the future

The lower stock price of streaming giant Netflix also weighed on market sentiment. The company reported that both profit and revenue exceeded expectations, and that the number of paid subscribers increased 16% year over year, but it said it will no longer report paid membership data starting in 2025.

US stocks had a difficult start to the second quarter. Since entering April, the performance of major stock indexes has been sluggish.

All three major US stock indexes are likely to record declines this week. The Dow and S&P 500 are about to record their third consecutive week of decline, and the NASDAQ may record a fourth consecutive week of decline.

So far this week, the S&P 500 index has declined by 2.2%, and is about to record its worst weekly performance in half a year. By Thursday's close, the index had been falling for five consecutive trading days, the first time since October last year. The Dow fell 0.55% this week, and the S&P 500 index fell 3.55%.

Tom Lee, co-founder and head of research at Fundstrat, a financial market research agency with the title of “the magic operator of Wall Street,” warned not to buy when the stock market falls now, because the stock market will experience a wave of sell-off in the next few weeks before it actually bottoms out.

Tom Lee, who previously made a very accurate forecast of the 2023 S&P 500 index trend, is one of the analysts who are most optimistic about the stock market this year.

However, he warned that opportunistic investors should not rush into the market. He pointed out that the market volatility indicator VIX is soaring, and rising volatility usually triggers investors to sell off, which may put pressure on the stock market in the short term.

He also said that if the conflict in the Middle East does not escalate further, market volatility eases, and investors show signs of slowing down the pace of sell-off, then US stocks may bottom out next month or even earlier.

The market lowered expectations of the Federal Reserve's interest rate cut, and the possibility of an interest rate hike in June surfaced

The main reason for the correction in the US stock market this week is that the market lowered its expectations for the Fed to cut interest rates. Economists and strategists now believe that the Federal Reserve will not cut interest rates until at least September, and more and more market participants even think that the Fed may not cut interest rates at all this year.

Minneapolis Federal Reserve Governor Neel Kashkari (Neel Kashkari) said on Thursday that the central bank may keep interest rates stable throughout the year, and that the first rate cut may not occur until 2025.

Federal Reserve Bank of New York Governor John Williams (John Williams) even mentioned a possible rate hike this year. He said that the Federal Reserve is in no hurry to cut interest rates, and economic data will determine the timing. If interest rate hikes can help achieve the Fed's inflation target, then it is also possible to raise interest rates.

Atlanta Federal Reserve President Raphael Bostic (Raphael Bostic) said that it is expected that interest rates will only be cut once this year, and that they should wait until near the end of the year.

J.P. Morgan Chase President Daniel Pinto believes that given the high level of inflation, the Federal Reserve may not cut interest rates at all this year.

Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management, said, “The biggest concern in the stock market right now is inflation. Inflation is accelerating again. Whether the Federal Reserve will cut interest rates in 2024 is a question, let alone once or twice.”

The market has now begun to consider the possibility that the Federal Reserve will raise interest rates in June.

According to the Atlanta Federal Reserve's market probability tracking tool, as of this week, guaranteed overnight financing rate (SOFR) options reflect a probability of an interest rate hike of 25 basis points in June of about 3.6%.

Monetary Policy Analytics economist Derek Tang said, “New York Federal Reserve Chairman Williams did not refute interest rate hikes. The FOMC, which sets the policy, still has plenty of room to eliminate expectations of interest rate cuts, and this will tighten financial conditions. I think they're nervous about raising interest rates again, and I hope they can control the risk of a recession. But they're walking a tightrope, and there's much less room for mistakes now than a few months ago.”

Individual stocks in focus

Star technology stocks generally fell, with Netflix falling nearly 8%, TSMC falling nearly 2%, and Nvidia and Meta falling more than 1%.

Most popular Chinese securities fell, with Ideal Auto falling more than 6%, NIO falling nearly 4%, and JD and Xiaopeng Motors falling about 2%.

$Super Micro Computer (SMCI.US)$Down more than 7%, the company announced the date of the Q3 results announcement, but did not provide preliminary estimates as in the previous quarter.

$Netflix (NFLX.US)$After the results, it fell by nearly 8%, doubling expectations with 9.33 million new subscribers added in Q1, but this suggests a slowdown in growth.

$Trump Media & Technology (DJT.US)$It rose more than 5%, and the company sent a letter to Nasdaq questioning the company's alleged short selling activities.

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