Source: Wall Street See
The US job market continues to weaken, with manufacturing shrinking its deepest in eight months. Traders expect the Federal Reserve to cut interest rates three times this year. The 10-year Treasury yield fell below 4% for the first time since February, and the 2-year yield dropped 10 basis points. US stocks opened higher due to the Fed's dovish outlook but suffered significant losses during the day due to the sluggish economy. The Dow plunged more than 740 points, the S&P 500 fell by 2% at one point, and the Nasdaq, small-cap index, and Chinese concept index all fell more than 3%. The chip sector index experienced the deepest drop of more than 8%, and Tesla and Nvidia both fell more than 6.5%. The "fear index" VIX rose to its highest level since February. Intel's earnings report plummeted by 20% after the market closed, while Apple's Greater China region revenue fell more than expected, leading to a drop of more than 1% after trading hours. Amazon's second-quarter revenue and future guidance were disappointing, causing a drop of more than 5% after trading hours. The Bank of England cut rates for the first time in four years, causing the pound and British bond yields to plummet. Safe-haven demand boosted the US dollar and eurozone government bonds, and the yen briefly rose above 149, but gold fell, and US oil rose above $78 before falling more than 2%.
With weak US data, a rate cut by the Bank of England, and escalating Middle Eastern geopolitical conflicts, investors have flocked to safe-haven assets, resulting in a major drop in US AI, chip, and technology stocks. Meanwhile, US bonds, gold, and the yen have risen due to safe-haven demand.
The US labor market continued to cool, and several indicators suggested that it had returned to pre-pandemic levels. The number of initial jobless claims for the week ended July 27 rose to 0.249 million, higher than the expected 0.236 million and the previous value of 0.235 million. This rebound in data adds to expectations of a rate cut, which is good news. US data continues to suggest an economic slowdown. Its July ISM Manufacturing PMI was 46.8, significantly lower than the market's expected 48.8 and June's previous value of 48.5, marking the largest contraction in eight months and intensifying concerns about a US economic recession. Public utilities and other high-dividend sectors fell the most.
After the data was released, the 10-year Treasury yield fell below 4% for the first time since February, and major US stock indices turned lower. Traders believed that weak economic data would support the Federal Reserve to cut rates three times this year, for a total of 75 basis points.
Intel's earnings report plummeted 20% after the market closed, and it suspended dividend payments for the first time in 32 years. Apple's third-quarter Greater China revenue fell more than expected, leading to a drop of more than 1% after trading hours. Amazon's second-quarter revenue and future guidance were disappointing, causing a drop of more than 5% after trading hours.
In terms of geopolitics, according to CCTV news, informed sources revealed that Hamas' political bureau leader, Ismail Haniyeh, was assassinated, and Hamas has frozen ceasefire and prisoner swap negotiations indefinitely. Iran's Supreme Leader Ali Khamenei has ordered direct strikes against Israel in retaliation for Haniyeh's assassination in Tehran.
Some analysts believe that the surge in support for US Vice President Harris in US election polls, as well as the sharp increase in the probability of a Fed rate cut, have dealt a double blow to the "Trump trade." In the 11 days since Harris became a candidate, the Trump victory trading strategy has lost its momentum, with the US dollar stagnating, US Treasuries rising, and Bitcoin falling.
On the international front, the Bank of England cut interest rates by 25 basis points for the first time since early 2020, causing the pound to fall sharply against the US dollar, and British bond yields also fell significantly. However, traders increased their bets that the Bank of England will cut rates by another 40 basis points before the end of the year, indicating that the market is anticipating two more cuts.
US stocks plummeted after opening higher, and the Nasdaq fell by 2.3%, with all chip stocks suffering losses. Nvidia fell 6.7%.
US stocks suffered major losses after opening higher, with small-cap and technology stocks falling the most, and the semiconductor sector plummeting 7.1% and falling more than 8% at one point.
US stocks opened higher due to the Fed's dovish outlook but suffered significant losses during the day due to the sluggish economy. Tech-heavy Nasdaq suffered the deepest losses, falling more than 3.1% before the close. The S&P 500 index fell more than 2%, and the Dow Jones Industrial Average, which is closely related to the economic cycle, fell more than 1.8% or 744 points at its lowest point, retreating nearly 1,000 points from its daily high. The Russell small-cap stock index fell more than 3.7%.
As of the close:
The S&P 500 index fell 75.62 points, or 1.37%, to 5,446.68. The Dow fell 494.82 points, or 1.21%, to 40,347.97. The Nasdaq fell 405.26 points, or 2.30%, to 17,194.15.
The Nasdaq 100 fell 2.44%; the Nasdaq Technology Market Value-Weighted Index (NDXTMC), which measures the performance of technology industry components of the Nasdaq 100, fell 3.11%; the Russell 2000 index fell 3.03%; and the fear index VIX rose 13.81% to 18.62.
The PHLX Semiconductor Index fell 7.14%, the Dow Jones KBW Regional Bank Index fell 4.37%, and the Philadelphia Stock Exchange KBW Bank Index fell 2.99%.
Small-cap stocks fell by 3%, with the Nasdaq index down by 2.3% and the Dow Jones and S&P 500 down more than 1%
Among the 11 sectors of the S&P 500 index, the S&P information technology/technology sector fell by 3.36%, the energy sector fell by 2.56%, the consumer discretionary sector fell by 2.25%, the industrial sector fell by 1.83%, the financial sector fell by 1.38%, while the real estate sector rose by 1.58% and the utilities sector rose by 1.85%.
Except for Meta, the 'Magnificent Seven' tech giants all fell. Nvidia led the drop, falling by 6.67%, followed by a big drop for Tesla of 6.55%, Amazon fell by 1.56%, Google A fell by 0.45%, Apple fell by 1.68%, Microsoft fell by 0.3%, and Meta rose by 4.82% on the day following the earnings report.
Chip stocks were almost all in collapse. The Philadelphia Semiconductor Index fell by 7.14%, the industry ETF SOXX fell by 7.21%, and Nvidia's double long ETF fell by 13.3%.
Arm Holdings fell by 15.72%, Qualcomm fell by 9.37%, Broadcom fell by 8.5%, AMD fell by 8.26%, KLA fell by 8.13%, ON Semiconductor fell by 8.12%, Micron Technology fell by 7.57%, Applied Materials fell by 7.49%, ASML ADR fell by 5.66%, Intel fell by 5.5%, Taiwan Semiconductor's US shares fell by 4.6% after the earnings report was erased.
AI concept stocks were widespread. SoundHound AI, a voice AI company held by Nvidia, fell by 8.45%. BigBear.ai fell by 7.28%, Snowflake fell by 4.74%, Dell fell by 4.62%, Super Micro Computer fell by 4.19%, CrowdStrike fell by 3.34%, Palantir fell by 3.01%, BullFrog AI fell by 2.03%, Oracle fell by 1.39%, Serve Robotics, an AI robot delivery company held by Nvidia, fell by 1.48%.
China concept stocks collectively fell. The Nasdaq Golden Dragon China index closed down 3.35%. Among ETFs, the China Internet ETF (KWEB) fell by 2.15% and the China Technology ETF (CQQQ) fell by 1.45%.
In the popular Chinese concept stocks, Gaotu Education fell by 11.87% and New Oriental Education fell by 9.38%; 'Wei Xiaoli' published its July report, and NIO fell by 8.56%, Xiaopeng fell by 5.33%, Li Auto fell by 1.87%; Douyu fell by more than 4.5%, JD.com fell by more than 4.3%, EHang Intelligent fell by more than 4.3%, JinkoSolar Energy fell by more than 3.7%, and Qihu Technology fell by more than 3.5%, while Ctrip, Ke Holdings, VIPShop, Zai Lab, Baidu, and ZTO Express fell by about 3.2% at most; Netease and Alibaba fell by 1.1%, Baidu and ZTO Express fell by about 2.4%, and Bilibili rose by more than 0.5%.
On the news front:
New energy vehicle start-ups such as Weimar, BYD, Chongqing Sokon Industry Group Stock, and Li Auto Inc. released their July sales data. In July, BYD's sales of new energy vehicles exceeded 0.34 million, a YoY increase of 30.6%; Chongqing Sokon Industry Group Stock's sales of new energy vehicles in July increased by 508.25% YoY; Li Auto Inc.'s sales in July exceeded 0.05 million and its cumulative delivery volume ranked first; NIO Inc.'s delivery volume exceeded 0.02 million for the third consecutive month in July, and Xpeng's sales in July increased by 1% YoY.
TAL Education fell by 9.38%. The company's Q1 net revenue for fiscal year 2025 was $0.414 billion, an increase of 50.4% year-on-year, with net income of $11.402 million, compared to a net loss of $45.037 million in the same period last year.
Other individual stocks with significant changes due to earnings reports are:
Intel suffered a major setback, falling more than 20% after hours. The company's Q2 revenue unexpectedly declined, with plans to cut more than 15% of its workforce and suspend its dividend for the first time in 32 years.
Apple fell more than 1% after hours. Apple's revenue and profits have exceeded expectations for six consecutive quarters. Although iPhone revenue has fallen year-on-year, the total amount is better than expected. Revenue in the Greater China region was the only geographic region that fell year-on-year and exceeded expectations. CEO Cook stated that he still has confidence in the Chinese market in the long run, and the installation base of iPhones in mainland China and Greater China has actually reached a new high. Apple's smartphones rank in the top three in urban sales in China, and performance in the Chinese market has been accelerating since the first half of the fiscal year. Apple acknowledges that spending on artificial intelligence has increased year-on-year, and bullish on AI is another reason people buy new iPhones.
Amazon fell more than 6% after hours. Although the sales of AWS, the cloud business, maintained two-digit strong growth in the second quarter, Amazon's overall sales guidance in the third quarter was inferior, and a red light was lit for the sluggish demand for cloud services. At the same time, Amazon's profit guidance for the third quarter is also lower than expected, reflecting the profit pressure of technology giants when they invest heavily in the field of artificial intelligence (AI).
Toyota's stock price fell 7.48% in regular trading hours in the US, BMW fell 3.59%, and Volkswagen fell 4.06%. Due to the increasingly fierce competition in the global automobile market, especially the protracted price war in the key market of China, the profit margins of the two major German automakers, Volkswagen and BMW, have both declined in the second quarter. Volkswagen's deliveries in the Chinese market in the second quarter fell by 19% year-on-year, and it is expected that the full-year revenue growth will not exceed 5%. BMW's revenue and profit margins in the second quarter both declined, and sales in the Chinese market in the first half of the year fell by 4%. Japanese automaker Toyota's sales of Toyota and luxury Lexus brands in China dropped by 17.6% due to lower-than-expected growth in operating profit in the second quarter.
Moderna is down 21.01%. Moderna's revenue in the second quarter exceeded market expectations, and the loss was smaller than expected. The main reason for the decrease in revenue was the decrease in sales of the company's new crown vaccine. Due to the decline in sales in the European market and the fierce competition in the US respiratory vaccine market, Moderna has lowered its full-year sales expectations.
Eli Lilly and Co's blockbuster drug Zepbound improved the long-term health of obese patients with heart failure in a clinical trial, highlighting the cardiovascular benefits of weight-loss drugs and boosting Eli Lilly's stock by 3.5%. Eli Lilly CEO stated that weight-loss drugs are expected to soon overcome supply shortages.
Mining stocks almost collapsed across the board, with First Majestic falling 13.43%, Hecla Mining falling 7.79%, Coeur Mining falling 7.55%, Pan American Silver falling 3.79%, Gold Miners ETF GDX falling 1.74%, Barrick Gold Falling 1.46%, and Silver ETF SLV falling 1.36%.
Due to weak US economic data and a rate cut by the Bank of England, European stock markets fell collectively, with bank sectors taking the biggest hit, down 4.5%: Pan-European Stoxx 600 index fell 1.23%. The Eurozone STOXX 50 index fell 2.2%, approaching the 200-day moving average (the technical indicator temporarily reported 4739.41 points). Most sectors fell, with the banking sector down 4.48%, and retail trade being the only sector to rise by 1.27%. Germany's DAX 30 index fell 2.30%. France's CAC 40 index fell 2.14%. Italy's FTSE MIB index fell 2.68%. The UK's FTSE100 index fell 1.01%. The Netherlands' AEX index fell 1.46%. Spain's IBEX 35 index fell 1.90%.
The STOXX 600 index fell 4.47%, with Bloomberg data showing that nearly all of its 48 constituent stocks fell. Societe Generale fell 8.97%, and HSBC Holdings fell 6.46%, making it the fifth largest fall. The majority of sectors declined, with the banking sector down 4.48%, and retail trade being the only sector to rise by 1.27%.
Germany's DAX 30 index fell 2.30%. France's CAC 40 index fell 2.14%. Italy's FTSE MIB index fell 2.68%. The UK's FTSE100 index fell 1.01%. The Netherlands' AEX index fell 1.46%. Spain's IBEX 35 index fell 1.90%.
The STOXX 600 banking sector fell 4.47%, with Bloomberg data showing that nearly all of its 48 constituent stocks fell. Societe Generale fell 8.97%, and HSBC Holdings fell 6.46%, making it the fifth largest fall.
Other individual stocks with significant changes due to earnings reports are:
Societe Generale fell 8.97% despite beating second-quarter profit expectations and revising its outlook for French retail.
Rolls-Royce's stock price rose more than 11% during regular trading hours in the US, reaching a historic high. The company resumed dividends, had strong performance in the first half of the year, and raised profit forecasts.
The sharp decline in short-term US Treasury yields drove investors towards safe-haven sovereign bonds due to weak US economic data, a rate cut by the Bank of England, and the Middle East situation.
The two-year US Treasury yield, which is more sensitive to changes in monetary policy, fell 10.73 basis points at the end of the day, hitting a daily low of 4.1502%. At 16:30, it hit a daily high of 4.2964%. Before the Bank of England announced its rate cut, the yield fluctuated within a narrow range of less than 4 basis points. After the announcement, it fell sharply and then fell further after the release of the US ISM manufacturing data.
The yield on the 10-year US Treasury bond fell below 4% for the first time since February, with a decrease of 4.98 basis points in the closing price, reaching 3.9798%. The intraday trading range was 4.0642%-3.9627%. The Bank of England announced a rate cut at 19:00 Beijing time, which caused a wave of diving, and the decline further expanded after the announcement of the US ISM Manufacturing Index at 22:00.
The yield on the benchmark 10-year German bond in the eurozone fell by 6.0 basis points to 2.244%. The yield on the two-year German bond fell by 7.9 basis points to 2.453%.
The yield of 10-year French government bonds fell by 1.9 basis points, the yield of 10-year Italian government bonds fell by 0.5 basis points, the yield of 10-year Spanish government bonds fell by 2.4 basis points, and the yield of 10-year Greek government bonds fell by 0.8 basis points.
The Bank of England cut interest rates for the first time in four years, and the two-year UK bond yields that are more sensitive to interest rates fell by 15 basis points at one point, the largest intraday drop since December last year, and still fell more than 10 basis points to 3.72% at the end of the day. The yield on 10-year UK bonds fell 9 basis points to a record low since February of 3.88%. UK government bond prices soared, traders bet on two more rate cuts this year.
As concerns about weak US economic recession and weak oil demand overshadowed the impact of the Middle East situation, US oil rose more than 2% after breaking through $78 per barrel, and then fell more than 2%.
WTI September crude oil futures fell by $1.60, or nearly 2.06%, to $76.31 per barrel. Brent October crude oil futures fell by $1.20, or nearly 1.49%, to $79.52 per barrel.
US and Brent crude oil both hit daily highs in early European stocks, rising by about 1.2% and approaching $79 and $82, respectively. However, after the release of the July ISM Manufacturing data in the US stock market, both plummeted by a large margin. Before the US stock market closed, US and Brent crude oil hit daily lows, falling by more than 2.1% and 1.7%, approaching $76 and $79, respectively.
Analysis shows that US manufacturing has shrunk for the fourth consecutive month in July, and the number of people applying for unemployment benefits has surged last week, once again causing concerns about the possibility of a US recession, overshadowing the supply concerns caused by the tension in the Middle East, and US oil has fallen by 2%.
Earlier, oil prices rose because Hamas leader was assassinated in Tehran, and the market worried that Israel and Iran would directly conflict. According to CCTV news, informed sources said that Hamas has indefinitely frozen ceasefire agreement negotiations, which brings risks to the oil supply in the Middle East.
US natural gas futures fell by 3.34% in August and reported $1.9680 per million British thermal units. However, investors are concerned about supply risks. European natural gas futures continue to rise, hitting new highs for the year. The TTF Dutch natural gas futures, the European benchmark, rose by 5.35% and reported 36.900 euros/megawatt-hour. ICE UK natural gas futures rose by 3.23%, reporting 92.870 pence/kilo calorie.
The US dollar index rose more than 0.2%, and the yen rose above 149 to hit a four-and-a-half-month high at one point.
The DXY, which measures against six major currencies, rose 0.23% to 104.339 points, and the intraday trading range was 103.863-104.447 points.
The Bloomberg US dollar index rose 0.34% to 1257.98 points, and the intraday trading range was 1251.80-1258.83 points.
Chris Turner, global market director of ING Group, said that even if the Federal Reserve is ready to cut interest rates, geopolitical tensions and economic slowdowns in other regions of the world still support the US dollar. The US dollar is the traditional "safe haven" for investors during a tense period.
Most non-U.S. currencies fell, with the euro and the pound hitting their lowest in about four weeks. The euro fell 0.31% against the US dollar, and the pound fell 1% at one point. The market raised bets that the Bank of England would cut interest rates twice by the end of the year; the US dollar against the Swiss franc fell 0.55%.
Offshore yuan (CNH) against the US dollar fell 237 basis points to 7.2513 yuan, with overall trading ranging from 7.2101-7.2583 yuan.
Among Asian currencies, the US dollar fell 0.43% against the yen, closing at 149.34 yen, the highest since mid-March. The intraday trading range was 150.89-148.51 yen. The euro fell 0.72% against the yen, closing at 161.19 yen; the pound fell 1.34%, closing at 190.227 yen.
The escalation of Middle East geopolitical conflicts has hit Israeli assets, with the shekel falling below 3.8 to the US dollar for the first time since April.
Most mainstream cryptocurrencies fell. The largest cryptocurrency by market cap, Bitcoin, fell 0.88% to $65,110.00, hitting a daily low of $62,615.00 at 01:46 Beijing time. The second largest, Ethereum, fell 3.14%, closing at $3,188.50, hitting a daily low of $3,096.50 at 02:42.
Safe-haven demand boosted gold prices to a two-week high, but the strengthening US dollar pushed gold prices down and stabilized above $2,440.
COMEX December gold futures rose 0.39% to $2,482.70 per ounce, closer to the historical high; COMEX September silver futures fell 1.77% to $28.425 per ounce at the close.
Gold prices rose and then fell as US stocks fell in August and the US dollar strengthened, prompting investors to turn to eurozone sovereign debt. At the end of Thursday's trading session in New York, spot gold fell 0.05% to $2,446.26 per ounce. After the US ISM manufacturing index was released, it hit a daily high of $2,462.34 per ounce. Spot silver, with industrial metal properties, fell 1.67% to $28.5235 per ounce, hitting a daily low of $28 and falling more than 2.7% before the US stock market's pre-market trading when it hit a daily high and rose above $29 per ounce.
Analysts said that as the market shifts its focus to U.S. non-farm employment data, gold prices touched a two-week high earlier in the day due to expectations of a rate cut in September and safe-haven demand, but then fell slightly due to the rising US dollar.
Most London industrial metals closed down. The economic barometer 'Dr. Copper' fell by more than 1.86% to $9052 per tonne. London aluminum rose by $6 to $2296 per tonne. London zinc rose more than 1.19% to $2707 per tonne. London lead fell more than 1.05% to $2062 per tonne. London nickel fell by about 1.94% to $16282 per tonne. London tin fell by $162 to $29894 per tonne.
Editor/Lambor