Investors accelerated their escape from technology stocks, with stocks and bonds in Europe and the United States being hit hard for two days. This week, the S&P 500 and Nasdaq fell by about 2% and 3.7%, respectively. The Nasdaq stopped its six-week continuous rise, while the Dow and small-cap indices rose by 0.7% and 1.7%, respectively. Chip stocks fell more than 3% on Friday and nearly 9% for the week. Nvidia also fell more than 8.7% for the past three months, making it the worst performer. The "seven sisters of technology" all fell for the week, and cybersecurity leader Crowdstrike, which triggered a global technology outage, fell 11% on Friday, the worst in nearly two years. The VIX panic index rose more than 32% for the week.
Oil prices fell sharply by 3% on Friday and fell more than 2.5% for the week. US oil once fell below $80, and London copper fell 5.7% for the worst performance since 2022. Gold fell more than 2% on Friday, failing to rise for four consecutive weeks, while Bitcoin rose nearly 5% to a one-month high.
A software update failure from cybersecurity leader Crowdstrike caused an epic crash of Microsoft Windows systems, which temporarily paralyzed many industries around the world such as media, aviation, and finance. Major US stock indexes fell across the board again, with only the safe-haven healthcare and utilities sector rising for the S&P 500, while the technology, energy, and financial sectors suffered the biggest losses.
Against the backdrop of growing uncertainty about Biden's re-election and the increasing popularity of the "Trump trade," as well as this week's unexpected rebound of the Philadelphia Fed Manufacturing Index, US bond yields continued to soar across the board and the dollar rebounded for the first week in three weeks. This heavy pressure depressed commodities, with crude oil falling 3% and gold falling more than 2%, while London industrial metals sustained two consecutive days of heavy losses.
Although there is increased uncertainty about Biden's re-election, the Biden campaign team claims that mainstream media's reports of his dropping out are not credible and that he is "absolutely" committed to running. Dow Jones believes that Biden's withdrawal will make it difficult for the dollar's recent bullish trend to continue, and research institutions say that if Biden withdraws, the "Trump trade" will further decline.
As Federal Reserve officials enter a quiet period ahead of the FOMC policy meeting at the end of July, dovish New York Fed President and third-ranking policy maker Williams said that the long-term trend of lowering the neutral interest rate before the epidemic still holds. Yesterday, San Francisco Fed President and voting member Daly praised the trend of cooling inflation and said that more data needs to be observed, leaving the market's mainstream expectation of a rate cut by the Fed in September unchanged.
The Dow tumbled more than 377 points while small-cap stock indices fell for three consecutive days, Tesla fell more than 4%, and Nvidia fell nearly 9% for its worst performance in three months.
On Friday, July 19th, major US stock indexes opened higher and quickly turned to declines in the stock market. The tech-heavy Nasdaq fell the deepest, down more than 1%, S&P 500 fell nearly 0.9%, the Dow fell more than 1.1% which is predominately made up of blue-chip stocks, Russell 2000 small-cap stocks fell more than 0.8%, and Nasdaq 100 fell more than 1.1%.
As of the close, major US stock indexes continued to fall. The Dow fell by 0.93%, the largest decline among major indexes, and the chip stock index fell more than 3%. The Nasdaq stopped its six-week consecutive rise, with Russell small-cap stock index falling for three consecutive days, but the Dow and small-cap stock indexes rose throughout the week, while the S&P and Nasdaq saw their worst weekly performance in three months.
The S&P 500 index fell 39.59 points, or 0.71%, to 5505.00, down 1.97% for the week, and fell for three consecutive days, further departing from the historical high of 5667.20 points on July 16.
The Dow fell by 377.49 points, or 0.93%, to 40,287.53, retreating from its historical high for two consecutive days, with a cumulative decline of more than 910 points and a decline of more than 2.20% for the week, while rising 0.72% for the week.
The Nasdaq fell 144.28 points, or 0.81%, to 17,726.94, down 4.94% from its previous record high on July 10, and fell 3.65% for the week.
Nasdaq 100 fell by 0.93%, down 3.98% for the week; Nasdaq Technology Market Cap Weighted Index (NDXTMC), which measures the performance of Nasdaq 100 technology stocks, fell by 1.25%, down 5.83% for the week; Russell 2000 index fell by 0.63%, and rose by 1.68% for the week; and the fear index VIX rose 3.70% to 16.52%, up 32.58% for the week.
The Philadelphia Semiconductor Index fell 3.11% to 5,267.16, down 8.80% for the week.
Among the 11 sectors of the S&P 500 Index, the S&P energy sector fell by 1.29%, information technology/technology sector dropped by 1.27%, financial sector fell by 1%, while basic materials and discretionary consumer sectors fell by at least 0.8%. The telecom sector fell by about 0.2%, and the healthcare sector rose by 0.5%. Throughout the week, the two popular technology stocks of technology and communication services led the decline of the large cap sector.
In investment research strategy, Bank of America's strategist stated that investors are flocking to the US stock market as their expectations for a Fed rate cut in September and Trump winning the election heat up. Traders have turned bullish before the Fed starts its first rate cut. Investors now expect a 100% chance of a Fed rate cut in September, a 75% chance of Trump winning the US presidential election, and a 68% chance of a "soft landing" in the next 12 months. Risk appetite is rotating, rather than receding. Funds are expected to flow from the US dollar to gold and from large companies to small ones.
Bank of America's team cited data from EPFR Global and said that US equity funds attracted about $45 billion in the week ending Wednesday, the fourth largest inflow in history. Small-cap funds attracted $9.9 billion, the second largest in history, and large-cap funds attracted $27.4 billion.
"Tech Seven Sisters" mostly fell, with a market value of $1.3 trillion evaporating since July 10th. Tesla fell by 4.02%, a cumulative decline of 3.64% this week; Nvidia fell by 2.61%, a cumulative decline of 8.75% this week, marking the largest single-week decline since April 19 (at the time, a cumulative decline of 13.59%); Microsoft fell by 0.74%, a cumulative decline for two consecutive weeks; Amazon fell by 0.34%, a cumulative decline of 5.84% for two consecutive weeks; Google A fell by 0.02%, a cumulative decline of 4.00% for two consecutive weeks; while Apple rose 0.06%, falling 2.70% this week, falling continuously since Monday (July 15th) when it rose to a historical high of 237.23 US dollars in intraday trading. Meta rose by 0.20%, a cumulative decline of 4.43% this week.
Chip stocks collectively fell. The Philadelphia Semiconductor Index fell 3.11%, and the industry ETF SOXX fell 3.06%; Nvidia's leveraged ETF fell 5.37%. ASML Holding ADR fell 3.11%, Applied Materials fell 3.4%, AMD fell 2.69%, Marvell Technology fell 2.49%, KLA Corp fell 3.11%, Intel fell 5.42%, Qualcomm fell 2.74%, Taiwan Semiconductor (TSM) fell 3.55%, Broadcom fell 1.97%, Micron Technology fell 2.72%, while Arm Holdings rose 3.2%.
AI concept stocks rose and fell. CrowdStrike fell by 11.1%, with a loss of nearly tens of billions of dollars in market value, the worst single-day performance since 2022. "Nvidia concept stock" SoundHound fell by 1.4%, C3.ai fell by 1.45%, Super Micro Computer fell by 0.6%, while Dell rose by 0.36%, Oracle rose by 0.38%, Bullfrog AI rose by 1.65%, and Snowflake rose by 0.01%.
Most of the China concept stocks fell. The KraneShares CSI China Internet ETF (KWEB) fell by 0.81% and fell 6.73% this week; the KraneShares China Technology ETF (CQQQ) rose by 0.38% and fell 3.99% this week; the Nasdaq Golden Dragon China Index (HXC) fell by 1.01%, reporting 5730.10 points, and fell 6.82% this week.
Among the popular China concept stocks, NIO Inc. fell by 1.76%, Kuaishou fell by 3.38%, Bilibili fell by 3.35%, Li Auto fell by 2.29%, Baidu fell by 0.58%, Alibaba fell by 1.66%, JD.com fell by 0.08%, NetEase fell by 1.31%, while Xiaopeng Motors rose by 1.2%, Pinduoduo rose by 0.73%, and Tencent Holdings (ADR) rose by 0.06%.
Among stocks with significant volatility:
US cybersecurity leader CrowdStrike fell by 11%, its worst single-day performance since 2022. CrowdStrike is a major software supplier whose software protects enterprises from ransomware attacks. On Friday, the company, which was working hard to fix the patching problems, became the focus. This patch caused a chain reaction throughout the system, causing various client systems from banks to global retail giants to healthcare systems to crash.
Shares of SunPower, the US photovoltaic leader, fell sharply by 55%, hitting a new low of less than $1, and the weekly decline was 75%, the worst performance since listing. The company notified dealers that there will be no more new product installations, and shipments were stopped earlier. Guggenheim lowered its target price to zero, saying that its business is facing bankruptcy risks and stocks may be delisted.
Shares of small-cap robot concept stock Serve Robotics rose over 241% during trading.Nvidia's 13G report showed that it currently owns a 10% stake in Serve Robotics. Public information shows that Serve Robotics is dedicated to developing AI-driven autonomous delivery robots. Serve's first product is a zero-emission robot that can provide services to people in public areas, such as delivering meals.Starbucks surged 6.85% at the close. According to media reports, one of the world's largest activist funds, Elliott Management, bought a large stake in Starbucks.
Starbucks rose sharply by 6.85% in the closing session. According to media reports, Elliott, one of the world's largest activist funds, has acquired a large stake in Starbucks.
Arm rose over 3% against the market, and Morgan Stanley upgraded its rating to "overweight", stating that its products are essential for the successful rise of edge AI.
The "weight loss duo" rebounded, and Eli Lilly and Co. rose 3.7% high and closed up nearly 1%, rebounding from a low of more than a month and a ten-week high. The decline this week narrowed to less than 8%. Novo-Nordisk rose over 1% on Friday.
European stocks fell throughout the week, with the pan-European Stoxx 600 index falling for five days in a row.
The pan-European Stoxx 600 index fell by 0.77% to 510.03 points, with a cumulative decline of 2.68% throughout the week. The Eurozone STOXX 50 index fell by 0.88% to 4827.24 points, falling for five consecutive days, with a cumulative decline of 4.28% throughout the week. The German DAX 30 index fell by 1.00%, with a cumulative decline of 3.07% throughout the week. The French CAC 40 index fell by 0.69%, with a cumulative decline of 2.46% throughout the week. The Netherlands AEX index fell by 0.95%, with a cumulative decline of 3.98% throughout the week. The Italian FTSE MIB index fell by 0.91%, and there was no trading information between Beijing time 18:53-22:54, with a cumulative decline of 1.05% throughout the week. The UK FTSE 100 index fell by 0.60%, and there was no trading data between Beijing time 18:54-22:54, with a cumulative decline of 1.18% throughout the week.
Most European stocks fell this week, with the European technology sector falling more than 8.7%, followed by the raw materials sector falling 6.7%. Only the bank and telecommunications sectors rose this week.
Robust US economic data combined with the "Trump trade" pushed US bond yields up across the board. The 2-year and 10-year US Treasury yields rose by about 6 basis points this week.
At the end of the session, the two-year US Treasury yield, which is more sensitive to monetary policy, rose by 3.95 basis points to 4.5109%, with a cumulative increase of 5.94 basis points throughout the week, and overall trading in the range of 4.4046%-4.5151%. The benchmark 10-year US Treasury bond yield rose by 3.69 basis points to 4.2389%, with a cumulative increase of 5.61 basis points throughout the week, and overall showed a V-shaped trend, trading in the range of 4.1421%-4.2469%.
US bond yields rose by about 5 basis points overall this week.
The 10-year German bund yield rose by 3.6 basis points to 2.467% at the end of the day, with a cumulative decline of 2.9 basis points throughout the week, and overall trading in the range of 2.516%-2.401%. The two-year German bond yield rose by 1.8 basis points to 2.784%, with a cumulative decline of 3.9 basis points throughout the week, and overall trading in the range of 2.834%-2.732%.
The French 10-year bond yield rose by 4.2 basis points, with a cumulative decline of 1.8 basis points throughout the week. The Italian 10-year bond yield rose by 4.0 basis points, with a cumulative decline of 1.5 basis points throughout the week. Spain's 10-year bond yield rose by 3.7 basis points, with a cumulative decline of 1.5 basis points throughout the week. The Greek 10-year bond yield rose by 5.5 basis points, with a cumulative decline of 2.9 basis points throughout the week. The UK 10-year Treasury bond yield rose by 6.0 basis points to 4.123%, with a cumulative increase of 1.5 basis points throughout the week. Overall, it showed a U-shaped trend, falling to 4.028% on July 18th.
The strengthening of the US dollar and the prospect of a ceasefire agreement between Israel and Palestine have put pressure on oil prices, with US crude oil falling by more than 3% to a new low in more than a month.
The strengthening of the US dollar suppressed oil prices. WTI August crude oil futures closed down $2.69, or about 3.25%, at $80.13 per barrel. Brent September crude oil futures closed down $2.48, or about 2.91%, at $82.63 per barrel. US oil fell 2.53% this week, and Brent fell 2.82%, both falling for two consecutive weeks.
Before the US stock market opened, US crude oil and Brent oil fluctuated, but US stocks started a sharp decline in early trading. When the new low was refreshed, US crude oil fell below the $80 per barrel mark for the first time since June 18th, and Brent fell by nearly 3% to $82.56 per barrel.
US Secretary of State Blinken said on Friday that the Israeli-Palestinian ceasefire is about to be implemented. The International Court of Justice believes that the Israeli settlement policy violates international law. Israel's occupation of Palestinian territory is in fact annexation. These messages have reduced market concerns over supply disruptions and slightly eased geopolitical risks, driving down oil prices. The US labor market and manufacturing data this week were better than expected, which led to the strength of USD. The strength of USD suppressed the demand for oil priced in USD and put pressure on oil prices.Israeli settlement policy violates international law.Bloomberg's dollar index rose 0.21%, to 1256.32 points. This week it rose by 0.54%, and the trading range was 1246.65-1256.49 points. Futures of US natural gas rose 0.14% in August, reporting $2.1280/million British thermal units and fell by 8.63% throughout the week. ICE UK natural gas futures rose 2.21% in the closing bell and reported 80.76 pence/calorie. European benchmark TTF Dutch natural gas futures fell 1.54%, reporting 32.17 euro/megawatt-hour.
The US dollar index soared to the highest level this week for two consecutive days, marking the best performance for USD since early June. Bitcoin futures rose more than 4%, reaching over $0.067 million.
One basket of dollar index DXY was up 0.18%, to 104.365 points, and rose 0.26% this week. It showed a U-shaped trend, and the trading range was 103.650-104.510 points. Futures of US natural gas rose 0.14% in August, reporting $2.1280/million British thermal units and fell by 8.63% throughout the week. ICE UK natural gas futures rose 2.21% in the closing bell and reported 80.76 pence/calorie. European benchmark TTF Dutch natural gas futures fell 1.54%, reporting 32.17 euro/megawatt-hour.
Noel Dixon, a macro strategy analyst at Deutsche Bank, believes that if Biden exits the US presidential election, traders will reduce trades related to Trump's victory. The exit of Biden will intensify the competition and cause market volatility. What is now digested is mostly Trump's victory. Betting on his economic policies will only reignite inflation, thereby putting pressure on long-term Treasury yields and pushing up the USD. Both parties will have a fiscal stimulus but the Biden administration has less. Under the same conditions, the long end of the US Treasury yield curve will be under less pressure. Traders will have to adjust their positions to adapt to this change.
UBS analysts said that due to the 3% rise in the US dollar index in 2024, investors should use short-term periods of USD strength to reduce their USD exposure or perform volatility selling strategy to generate income, because the US Federal Reserve may start cutting interest rates in September. Of course, if the Republican Party wins the White House and Congress, the USD may rise in the short term. However, as the USD is already 15% higher than at the end of Trump's first term, its impact may be smaller than during Trump's first term.
The yen-dollar exchange rate fluctuated around 157.24, and had reached a six-week high of 155.375 last Thursday. According to the daily operation data released by the Bank of Japan, the Japanese government may have intervened in an amount close to 6 trillion yen last week. Friday's data showed that Japan's core CPI accelerated for the second consecutive month in June, accelerating market expectations of a rate cut by the Bank of Japan at the end of this month. Traders expect a 41% chance of a 10 basis point rate hike.
Most mainstream cryptocurrencies rose. The largest market cap leader, bitcoin, rose 4.03% to $67,300.00 and rose 16.35% this week, with the highest point reaching $67,740.00. The second largest, Ethereum rose 2.85%, to $3,524.00, and rose by 13.04% this week.
Non-US currency generally fell. EUR/USD fell 0.13% and fell 0.23% this week; GBP/USD fell 0.23% and fell 0.57% this week.
Offshore RMB (CNH) fell 80 points to 7.2855 yuan against the US dollar, and the overall trading range was 7.2762-7.2878 yuan.
Among Asian currencies, USD/JPY rose 0.07%, reporting 157.48 yen, and fell 0.24% this week. EUR/JPY fell 0.43%, reporting 171.42 yen, and hit a low of 170 yen this week. GBP/JPY fell 0.80%, reporting 203.396 yen, and hit a low of 202.110 yen.
UBS analysts said that due to the 3% rise in the US dollar index in 2024, investors should use short-term periods of USD strength to reduce their USD exposure or perform volatility selling strategy to generate income, because the US Federal Reserve may start cutting interest rates in September. Of course, if the Republican Party wins the White House and Congress, the USD may rise in the short term. However, as the USD is already 15% higher than at the end of Trump's first term, its impact may be smaller than during Trump's first term.
Most mainstream cryptocurrencies rose. The largest market cap leader, bitcoin, rose 4.03% to $67,300.00 and rose 16.35% this week, with the highest point reaching $67,740.00. The second largest, Ethereum rose 2.85%, to $3,524.00, and rose by 13.04% this week.
Due to the pressure of the strong US dollar, profit-taking after reaching new highs, gold has experienced its largest single-day drop in over a month, while London copper has seen the deepest weekly decline in nearly two years.
The US dollar and US Treasury yields have jointly pushed down precious metal prices. COMEX August gold futures fell 2.28% to $2400.4 per ounce in the afternoon, while COMEX September silver futures fell 2.89% to $29.35 per ounce in the afternoon, falling below the $30 per ounce level.
As gold and silver plummeted, spot gold plunged more than 2% when pre-market trading hit its daily low for US stocks, hitting the $2400 mark; spot silver hit a low of nearly 3.2%, falling below the $29 mark at one point.
Analysts believe that some investors have chosen to take profits after gold prices reached new highs. For example, physical gold demand in Asia is sluggish, and consumers are unwilling to buy gold. Instead, they are using high gold prices to profit. The expectation of a 'soft landing' for the U.S. economy has boosted risk appetite and prompted investors to turn to riskier investments, putting pressure on gold prices.
London industrial metals all fell. 'Dr. Copper' fell $76 to $9,310 per tonne, with a cumulative decline of 5.74% this week, the worst weekly performance since 2022. London aluminum fell by more than 1.42%, with a cumulative decline of around 5.20% this week. London zinc fell by about 1.14% and accumulated decline of more than 5.67% this week. London lead fell more than 1.34%, and cumulative decline of 3.71% this week. London nickel fell more than 1.01%, and cumulative decline of around 3.56% this week. London tin fell more than 1.75%, continuing its decline of 4.08% since July 18th, with a cumulative decline of around 7.85% this week.
Editor/Somer