On the evening of the 7th, Beijing time, US stocks opened slightly higher on Tuesday. Previously, the Dow had been rising for the fourth consecutive trading day. Investors continue to pay attention to the Federal Reserve's monetary policy outlook and the latest financial reports from Disney and others.

As of press release, the three major indices fluctuated slightly, with the S&P 500 up 0.12%, the NASDAQ down 0.06%, and the Dow up 0.21%.

Minneapolis Federal Reserve President Kashkari said on Tuesday that starting in the second half of 2023, the rise in US inflation seems to have stalled; the question is whether the process of slowing inflation is still ongoing or will it just take longer. GDP growth has been slow recently due to inventories and net exports; potential demand remains strong. Kashkari said that considering the inflation data, he questioned whether monetary policy was sufficiently restrictive.

Prior to that, Richmond Federal Reserve Governor Barkin said on Monday that completing the fight against inflation may require a blow to demand, while New York Federal Reserve President Williams, the “top three” of the Federal Reserve, said that the Federal Reserve will lower interest rate targets at some uncertain time.

Citibank said that the Federal Reserve may continue its plan to reduce its balance sheet until the second quarter of 2025, unless there is a recession, which is longer than the previous forecast period. Since June 2022, the Federal Reserve has been gradually reducing its bond holdings through a process known as quantitative austerity (QT).

The Federal Reserve said last week that it will slow down the sell-off of monthly US Treasury bonds. To a certain extent, this move is aimed at easing potential pressure on the financing market.

Citi previously predicted that the Federal Reserve's measures to reduce the balance sheet size will continue until the end of 2024, which is largely in line with the expectations of other Wall Street strategists. Citibank strategist Jason Williams wrote in a report last Friday that the shift is because the Federal Reserve may want to reduce the size of its assets as much as possible, which is currently around $7.36 trillion.

Rob Haworth, senior investment strategist at Bank of America Wealth Management, said that it is certain that other conflicting economic data — such as the rise in the employment cost index — means that the actual trajectory of the US inflation situation is still questionable.

“I think the market is looking for some decisive evidence as far as the inflation situation is concerned,” Haworth said. He added that as the US economy continues to show resilience, his views on the economic outlook have become “more constructive.” “Inflation is still ongoing, but it's not accelerating to problematic levels. So we think there's still room to hold risky assets now.”

Ken Griffin, founder of the Citadel hedge fund, expressed concern about the state of the US economy. He questioned whether inflation could slow down significantly in the current environment, pointing out that wage growth and de-globalization trends have weakened the long-standing trend of deflation, which had a significant impact on commodity pricing.

At the same time, Griffin also presented his views on the Federal Reserve's monetary policy. He believes that if the Federal Reserve chooses not to cut interest rates in September, then the possibility of cutting interest rates in December will increase, and he expects the Federal Reserve to take action within this year. Despite this, he also acknowledged that the Federal Reserve has shown a cautious attitude and that the task of controlling inflation has become more difficult as the economy continues to grow.

A Morgan Stanley strategist said that the “mixed” message from key US economic data and the ensuing stock market fluctuations meant that investors should increase their holdings of basic consumer goods and other defensive stocks.

The April inflation data to be released next week will provide new insights into the US economy. The labor market is cooling down, according to employment data released last Friday. Some traders believe that the latest employment data shows that the Federal Reserve (Federal Reserve) will start cutting interest rates as early as September.

A Morgan Stanley research team led by Michael Wilson wrote in a report that for the US economy, a soft landing or so-called no landing (that is, economic growth remains elastic even if interest rates remain high) is possible. In this uncertain context, when market pricing and leading positions between stocks are affected by potential outcomes, it is necessary to adopt an effective way to invest

Individual stocks in focus

Star technology stocks had mixed ups and downs.$NVIDIA (NVDA.US)$,$Tesla (TSLA.US)$It fell about 3%.

Popular Chinese securities stocks generally declined.$Alibaba (BABA.US)$It fell nearly 3%,$Bilibili (BILI.US)$It fell nearly 6%.

$NVIDIA (NVDA.US)$It fell by about 3%. Well-known Wall Street investor Stanley Druckenmiller said in an interview with the media on Tuesday that he reduced his stock holdings of AI leader Nvidia at the end of March this year.

$Tesla (TSLA.US)$With a drop of more than 3%, the US National Highway Traffic Safety Administration (NHTSA) wrote to Tesla on May 6 regarding the recall inquiries that Tesla began last month. Furthermore, people familiar with the matter revealed that Tesla carried out another wave of large-scale layoffs last week, involving various departments such as software, services, and engineering.

$Apple (AAPL.US)$Up more than 1%. According to reports, after abandoning its car building plan, the Apple Car project, Apple is evaluating the possibility of cooperating with an American electric vehicle startup, while the electric vehicle company$Rivian Automotive (RIVN.US)$Probably a candidate target.

$Microsoft (MSFT.US)$There was a slight decline, and it was accused of anti-competitive behavior in Spain.

$Amazon (AMZN.US)$With a slight increase, it plans to spend $9 billion to expand its cloud computing infrastructure in Singapore.

$Disney (DIS.US)$Financial reports were poor, and the stock price fell by more than 8%.

Losses per share were higher than expected, electric car maker$Lucid Group (LCID.US)$It dropped nearly 10%.

Performance guidance falls short of expectations, big data analysis service provider$Palantir (PLTR.US)$It plummeted nearly 13%.

$UBS Group (UBS.US)$It surged more than 8%. First-quarter revenue was US$12.74 billion, up 46% year on year, and net profit of US$1.76 billion, up 71% year on year, far exceeding expectations of US$598 million. Among them, net interest income was US$1.94 billion, an increase of 40% over the previous year. UBS expects to complete the legal merger with Credit Suisse by May 31.

edit/emily