Source: Wall Street See
Authors: Fang Jiayao, Du Yu.
S&P 500 index rose on the fifth day of the six days, Nasdaq and Nasdaq 100 continued to reach new highs for six consecutive days, Dow Jones stopped falling for four consecutive days and pulled away from nearly two weeks low, Russell small-cap stock index stopped falling for two consecutive days and pulled away from a six-week low.
Comprehensive cooling of US inflation, September rate cut betting pushing US stocks rotation, S&P and Nasdaq ended seven-day consecutive gains and moved away from their highs, Tesla plummeted 8.4%, the worst in nearly half a year and stopped 11-day consecutive gains, Nvidia fell 5.6%, and the chip index fell 3.5%. The Russell 2000 small-cap stocks rose 3.6%, the best since November last year and the highest in two and a half years, and the worst-performing real estate sector this year had the largest increase in the year. US bond yields fell sharply across the board, with the US dollar falling the deepest in two months. The yen rose by 2.6% at one point, the biggest gain since the end of 2022, and anonymous officials confirmed that the government intervened to rescue the currency.
The upcoming bank earnings season on Wall Street is key to whether prospects can continue to outperform the broader market. After the US CPI data was released, JPMorgan brought forward its expectation for the Fed's rate cut from November to September.
Rate cut betting pushed US stock rotation, and investors withdrew, causing the magnificent seven technology giants to experience the largest drop in a year.
On Thursday, July 11, the S&P, Nasdaq, and Nasdaq 100 rapidly plunged after opening, while the Dow, which is closely related to the economy, turned higher, and small-cap stocks in the US surged.
Due to the unexpected decline in US June CPI consumer inflation on a monthly basis, and the core data hitting the lowest levels in years, the futures market has completely digested the possibility of a Fed rate cut in September. The S&P 500 index, dominated by large-cap and technology stocks, and the Nasdaq, opened at their highs and rose to new highs. The Dow Jones opened slightly lower.
After 10 minutes of trading, the S&P and Nasdaq had already turned downwards, and their declines continued to expand. The Dow, which converged on blue chip stocks, turned higher and rose by nearly 0.4%. In contrast, US small-cap, micro-cap, and nano-cap stocks rose against the trend. The Russell small-cap stock index accelerated upward during the trading day, rising by more than 3.5% at one point.
When approaching the end of the day and setting new lows, the Nasdaq approached 18,200 points and fell nearly 2.2%, ending the seven-day consecutive record high, and the S&P 500 fell more than 1%, ending the six-day consecutive record high. Russell small-cap stock index led the major US stock indexes, reaching a new high of 2,100 US dollars and closing at the highest since March 30, 2022.
At the close, the S&P and Nasdaq 100 said goodbye to six-day new highs. The Nasdaq fell away from seven-day new highs and closed at a daily low. The Dow rose about 154 points to its highest level in seven weeks since May 21, and the Russell small-cap stock index reached its highest level since March 30, 2022.
The Russell 2000 index closed up 3.6%, its best one-day performance since November 2023.
Among the 11 sectors of the S&P 500 index, the real estate sector rose by 2.66%, utilities, materials, industry, and energy sectors rose 1.83%-1.05%, the financial sector rose more than 0.8%, the consumer discretionary sector fell 1.47%, the telecommunications sector fell 2.56%, and the information technology/technology sector fell 2.74%.
Analysis shows that the surge in the S&P 500 index was abruptly stopped, and the 'roadblock' has always been the mega-cap technology stocks that have been driving the index higher this year. Investors sold off the magnificent seven technology giants, with the scale of the sell-off hitting a record in nearly a year.
The 'seven sisters of technology stocks' sharply declined and all closed at daily lows. Tesla fell 8.44%, its largest single-day decline since January 25, and performed the worst among the seven sisters of technology stocks, ending its eleven-day consecutive gains and returning all gains since July 3; Nvidia fell 5.57%, saying goodbye to its historical high; Apple fell 2.32%, ending seven consecutive gains, ranking the first in market value; Microsoft fell 2.5%, ranking the second in market value; Google A fell 2.9%, away from yesterday's historic high; Meta fell 4.11%, and Amazon fell 2.37%.
Chip stocks across the board collapsed. The Philadelphia Semiconductor Index fell 3.47%, breaking through the 5700-point mark, and the industry ETF SOXX fell 3.29%. Nvidia's twice-long ETF fell 11.09%; TSMC ADR fell 3.43%; KLA Corp fell 4.42%; Applied Materials fell 5.38%; Arm Holdings fell 7.12%; AMD fell 1.1%; Micron Technology fell 4.52%; Qualcomm fell 4.29%; Broadcom fell 2.22%; Intel fell 3.93%.
AI concept stocks varied. SoundHound.ai once rose more than 22.1%, but gave back most of the gains and fell 5.92%. BigBear.ai rose 3.23%, Snowflake rose 0.49%, and Oracle rose 0.77%, while Dell fell 3.46%, Palantir fell 2.74%, farewell to the historical high, and CrowdStrike fell 1.07%.
On the news front:
Expectations of a rate cut by the Federal Reserve in the United States are rising, with analysts saying that the conditions for action from September are now in place, and derivative traders have raised the probability of the Fed's cut in September from around 70% before the data release to over 80%. For the full year 2024, the implied rate cut is 57 basis points, or at least two 25 basis point rate cuts; previously it was around 49 basis points.
Tesla: Tesla plans to postpone the release of RoboTaxi from August to October. The risk lies in whether Tesla can create autonomous driving cars that are safer than human drivers if they want to become a god in the field of artificial intelligence. Overall, analysts and experts believe that widespread adoption of this technology may still take decades. Sources said that Tesla's designers were told to redesign many elements of the RoboTaxi.
Apple: Bank of America raised its price target for Apple from $230 to $256, saying, “The iPhone upgrade cycle boosts confidence.” BofA analyst Wamsi Mohan believes that aging of the installation base and those generative AI features should drive consumers to update (existing devices).
Chinese concept stocks outperformed the US stock market. The KraneShares CSI China Internet ETF (KWEB) rose 2.36%, the KraneShares China Tech Index ETF (CQQQ) rose 1.79%, and the NASDAQ Golden Dragon China Index (HXC) rose 2.24%.
In popular individual stocks, new car makers performed strongly, with XPeng up 7.68%, Li Auto up 3.42%, Nio up 1.3%, and Extreme Tech up 4.64%; JD.com up 6.99%, Baidu up 2.79%, Alibaba up 3.3%, Tencent Holdings (ADR) up 1.77%, Pinduoduo up 0.85%, and Bilibili up 3.89%.
Other stocks with large fluctuations include:
Gold and silver mining stocks rose across the board. Hecla Mining rose 7.3%, Coeur Mining rose 6%, Pan American Silver rose 5.5%, Gold ETF GDX rose 2.3%, and Silver ETF SLV rose 2.6%.
Among other assets, the US dollar index weakened, and yields on two- to 30-year US Treasury bonds fell more than 10 basis points during the intraday session. Short-term gold and silver rose, with spot gold breaking through the $2400/oz mark for the first time since May 22, and then gold soared 2% intraday, now trading at $2419.22/oz. The yen briefly rose more than 2%, and the pound rose to a one-year high against the dollar. However, some analysts believe that the appreciation of the yen is not due to the Japanese government's intervention in the foreign exchange market, but is most likely related to the allocation of portfolios caused by the Fed's rate cut.
Cooling inflation boosts oil prices. The softness of the US dollar boosted demand for oil priced in dollars. WTI crude oil futures for August rose $0.52, up more than 0.63%, to $82.62/ barrel. Brent crude oil futures for September rose $0.32, up more than 0.37%, to $85.40/ barrel.
The European STOXX 600 index closed up 0.60% at 519.51. The EURO STOXX 50 index closed up 0.35% at 4976.13.
Germany's DAX 30 index rose 0.69%, France's CAC 40 index rose 0.71%, Italy's FTSE MIB index rose 0.03%, the UK's FTSE 100 index rose 0.36%, the Netherlands' AEX index fell 0.38%, and Spain's IBEX 35 index rose 0.89%.
Weight loss drug concept stock Zealand Pharma GmbH Copenhagen's stock price fell 2.78% and fell from the closing historical high.
Cooling inflation boosts oil prices.
The US dollar weakened, boosting buyers' demand for oil priced in dollars. WTI August crude oil futures rose $0.52, up more than 0.63%, to $82.62 per barrel. Brent September crude oil futures rose $0.32, up more than 0.37%, to $85.40 per barrel.
Asian morning refreshes the daily high, and Brent crude rises to $85.89 per barrel, up nearly 1% on the day; after the CPI data is released, WTI crude oil falls deepest by 0.57%, while Brent crude falls deepest by 0.5%. Approaching the end of the session, WTI crude oil refreshes the daily high, up nearly 1.2%, breaking through the integer level of $83, and hit its highest level since April 19 on Friday, with intraday highs recorded at $84.53. Brent crude offset all its losses and closed at a daily high. Last Friday, intraday highs were reached since April 30 and pushed up to nearly $88. Analysts pointed out that rate cuts usually boost economic growth, thereby boosting crude oil demand. JPMorgan said summer driving is bullish for crude oil demand. The International Energy Agency (IEA) and OPEC differ on the issue of oil demand growth, and inflation and interest rate prospects overshadow mixed signals of oil demand this year. The IEA previously predicted that global oil demand growth this year and next year will slow to less than 1 million barrels per day, while OPEC maintains its global oil demand growth forecast unchanged, at 2.25 million barrels per day this year and 1.85 million barrels per day next year.
Analysis shows that rate cuts usually boost economic growth, thereby boosting crude oil demand. JPMorgan said summer driving is bullish for crude oil demand. The International Energy Agency (IEA) and OPEC differ on the issue of oil demand growth, and inflation and interest rate prospects overshadow mixed signals of oil demand this year. The IEA previously predicted that global oil demand growth this year and next year will slow to less than 1 million barrels per day, while OPEC maintains its global oil demand growth forecast unchanged, at 2.25 million barrels per day this year and 1.85 million barrels per day next year.
The EIA natural gas inventory increased more than expected, and US August natural gas futures fell by more than 2.6%, while the TTF Dutch natural gas futures, the European benchmark, rose by 2.7%, and ICE UK futures rose by about 2.2% at the end of the session.
US CPI data boosts rate cut expectations, with gold rising more than 1% to return to the $2400 mark and silver surging by 3%.
US bond yields and the US dollar fell together, supporting the rise of precious metals. COMEX August gold futures rose 1.67% to $2419.5 per ounce at the end of the session, and COMEX September silver futures rose 2.24% to $31.71 per ounce.
Spot gold and spot silver only rose slightly before the release of US inflation data. After the data was released, gold and silver rose sharply and refreshed the daily high. Spot gold rose more than 2.2% to break through the $2400 mark and spot silver rose more than 3% to return to above $31.7 on Friday. Near the end of the session, both gold and silver fell slightly. Overall, spot gold rose to a seven-week high above $2400, approaching the historic high of $2449.89 per ounce set on May 20, and spot silver rose above $31.7 for the first time since May 30, reaching a six-week high.
Analysis shows that affected by US inflation data, the US dollar fell to a more than one-month low and the US 10-year Treasury notes yield fell to a four-month low, enhancing the attractiveness of gold.
Other precious metals such as platinum and palladium rose more than 1%.
Most industrial basic metals in London fell. The 'copper doctor' fell 1.19%, falling to a low of one week. London aluminum fell nearly 0.3% to a three-month low. London zinc fell by about 0.22%, London nickel fell by nearly 0.49% to a three-month low, London tin fell by more than 0.97% hovering around a three-month high, while London lead rose by nearly 0.9%.
Editor/Jeffy