Source: Wall Street See
Authors: Fang Jia Yao, Du Yu, Huang Wen Wen, Long Yue.
US July PPI inflation fell short of expectations, and the market is looking at a 50-basis-point rate cut by the Fed in September. US stocks closed at a daily high, with the S&P and Russell small-cap indices up more than 1.6%, the chip stock index up more than 4%, and the Chinese concept stock index turning up. The offshore RMB rose more than 300 points. Starbuck's unexpected change of leadership led to a 24% increase, the best in history. The yen and US treasuries rose in tandem, indicating a flight to safety in the Middle East. The oil market is more concerned about the cooling of demand, and US crude oil ended its five-day rally and lost three-week highs.
US stocks rose across the board, with the Nasdaq up 2.43%, the chip stock index up 4.18%, Nvidia up 6.53%, rebounding more than 17% in four days, with a market cap up more than $420 billion. Petroleum stocks closed down, restraining the Dow's performance:
Main stock indices rose more than 1% across the board: S&P 500 rose 1.68% to 5,434.43 points. The Dow rose 1.04%, or 408.63 points, to 39,765.64 points. The Nasdaq rose 2.43% to 17,187.61 points. The Nasdaq 100 rose 2.50%. The Nasdaq Technology Market Value Weighted Index (NDXTMC), which measures the performance of Nasdaq 100 technology stocks, rose 2.94%. The Russell 2000 index rose 1.61%. The VIX fear index fell 12.51% to 18.12.US industry ETFs closed mostly higher. Semiconductor ETFs rose more than 4%, while global technology ETFs and technology industry ETFs rose more than 3%. Consumer discretionary ETFs and internet stock index ETFs each rose at least 2%, while biotech index ETFs, global aviation industry ETFs, banking ETFs, regional banking ETFs, and medical industry ETFs each rose at least 1%. Energy ETFs remained down nearly 1%.
Most of the 11 sectors of the S&P 500 index rose. The information technology/technology sector rose 3%, the consumer discretionary sector rose 2.42%, the telecom sector rose 1.48%, and the daily consumer goods sector rose 0.46%, the smallest gain. The energy sector was the only one to fall, down 1.02%. Fold up
Bank of America's survey of global fund managers shows that expectations of global economic growth slowing have led investors to increase cash holdings and reduce stock investments. Cash allocations rose from 4.1% to 4.3%, while the proportion of overstocked stocks fell sharply from 51% to 31%. In August's survey, nearly half (47%) of respondents predicted that the global economy will be weak in the next year.
Bank of America analysts said institutional investors bought $5.8 billion in US stocks on the dips, while hedge funds and retail investors sold. In terms of sectors, technology and communication services saw the largest inflows, and the tech sector saw inflows for the first time in four weeks. The financial sector is second, and the industrial sector recorded the largest inflows since March. Customers sold energy, essential consumer goods, real estate, and utility stocks, with energy stocks outflowing for three consecutive weeks. Corporate customers of Bank of America accelerated their stock buybacks last week, above typical seasonal levels.
Citi strategist pointed out that investors in the stock market remain cautious ahead of this week's key inflation data in the US, reflecting a reduced market risk appetite. Although investors continue to be bullish on technology stocks, there are significant sell-off risks in US technology stocks, and any adverse economic data could put pressure on long positions in these technology stocks and exacerbate downside risks in the market. If negative developments occur, the average loss of long positions could reach 7.6%.
Many models of Goldman Sachs and JPMorgan show that the financial market's expectations of the risk of economic recession in the United States are heating up.
The 'tech seven sisters' rose across the board. Nvidia rose 6.53% to $116.14, accumulating a rebound of nearly 17.42% since August 7. The four-day market value increased by $423.858 billion. Tesla rose 5.24%, Meta rose 2.44%, Amazon rose 2.06%, Microsoft rose 1.77%, Apple rose 1.72%, and Google Class A rose 1.15%.
Chip stocks lead the gains. The Philadelphia Semiconductor Index rose 4.18%; The industry ETF SOXX rose 4.06%; The two times long ETF of Nvidia rose 13.05%. On Semiconductor rose 3.61%. ASML Holding's ADR rose 1.95%, Qualcomm rose 4.04%, Intel rose 5.73%, KLA Corp rose 4.79%, AMD rose 3.19%, Arm Holdings rose 5.69%, Broadcom rose 5.07%, Taiwan Semiconductor's ADR Rose 2.81%, Applied Materials rose 3.99%. Micron Technology rose 2.96%.
AI concept stocks have mostly risen. 'AI demon stock' Super Micro Computer rose 4.89%; Dell Technologies rose 4.9%; Oracle rose 0.39%; Snowflake rose 3.28%; CrowdStrike rose 3.66%; C3.ai rose 1.59%; Palantir rose 3.44%; while BigBear.ai fell 5.19%, SoundHound AI, AI voice company held by Nvidia's fell 3.29%, Serve Robotics, an AI robot distribution company held by Nvidia, fell 7.49%, and BullFrog AI fell 0.79%.
Most Chinese concept stocks rose. The Nasdaq Golden Dragon China Index rose 0.18% to 5597.13 points. In the ETFs, the China Technology Index ETF (CQQQ) rose 1.11%, and the China Internet Index ETF (KWEB) fell 0.11%.
Among popular Chinese concept stocks, Huya rose 14.13%, with total Q2 revenue of CNY1.54 billion and a possible buyback of up to $0.1 billion in ADS or common stock. JiKeXueYuan.com rose 6.89%, XPeng rose 5.13%, NIO rose 3.46%, Tencent Music's ADR rose 0.89%, Pinduoduo rose 1.09%, JD.com rose 0.23%, Bilibili rose 3.71%, Baidu rose 1.14%, Alibaba rose 0.23%, while NetEase fell 0.09%, Li Auto fell 0.62%, New Oriental fell 0.34%, Kingsoft Cloud fell 4.9%. The company's Q2 revenue and operating profit were in line or exceeded expectations, but their social entertainment paid users were lower than expected.
Among stocks with larger fluctuations, Starbucks (SBUX) rose 24.50%, achieving the largest single-day increase in history with a total market value over $100 billion, and the company appointed Brian Niccol as CEO and chairman. Chipotle Mexican Grill (CMG) fell 7.5% as the company's CEO moved to become CEO of Starbucks.
Investors are waiting for a series of economic data in the Eurozone this week, and European stocks are closing higher:
The pan-European Stoxx 600 index rose 0.52%, with most sectors rising. Healthcare stocks rose by about 1%, while mining stocks fell by 0.5%. Most major regional stock indices closed higher, with the UK stock index up 0.30%, the Spanish stock index up 0.73%, the Italian stock index up 0.24%, the German stock index up 0.48%, and the French stock index up 0.35%.
The US PPI data boosted market's expectations for a interest rate cut by the Federal Reserve. The two-year US Treasury yield fell by about 8 basis points:
US Treasury Bonds: At the end of the day, the two-year US Treasury yield, which is more sensitive to monetary policy, fell by 7.75 basis points to 3.9398%, and after the release of US PPI data at 20:30 Beijing time, fell from the integer mark of 4% to around 3.95%, with trading fluctuating within the range of 4.0271%-3.9356%. The yield on the 10-year benchmark US Treasury bond fell by 5.32 basis points to 3.8503%"and fluctuated between 3.9226% and 3.8465% during the day.
Global bond yields fell, with the German benchmark 10-year bond yield down by 4.0 basis points. The 30-year German bond yield fell by 3.1 basis points, and the two-year German bond yield fell by 5.3 basis points. The French 10-year government bond yield fell by 4.9 basis points, the Italian 10-year government bond yield fell by 6.5 basis points, and the Spanish 10-year government bond yield fell by 5.3 basis points. The 10-year Greek government bond yield fell by 6.6 basis points. The two-year British bond yield fell by 3.1 basis points, and the UK 10-year government bond yield fell by 2.8 basis points.
Global concerns about slowing oil demand outweighed tensions in the Middle East, and US crude oil fell more than 2% to end its five-day winning streak:
US Crude Oil: WTI September crude oil futures fell from $80.06/barrel yesterday to $78.35/barrel today, with an intraday decline of 2.13%, or $1.71. European and US stocks erased some of their earlier losses, with US crude oil intraday rising above $80.1, up more than 0.11%, before continuing to decline. Before the US stock market closing, it hit a daily low and fell nearly 2.4%, approaching the integer price of $78/barrel.
Brent crude oil futures for October fell from $82.30/barrel to $80.69/barrel yesterday, a daily decline of more than 1.95% or $1.61. The trend of Brent oil is similar to that of WTI oil, with the highest holding steady at yesterday's closing price and the lowest falling by more than 2.1% to approach $80.5.
IEA's monthly report shows that the growth of oil demand has slowed significantly. In the second quarter, the global oil demand growth rate was the slowest since the end of 2022, at only 0.87 million barrels per day. If OPEC+ increases supply, the oil market will face oversupply.
For natural gas, investors are weighing high inventories and hot weather (bringing potential air conditioning cooling demand). US September natural gas futures fell by more than 1.87%, to $2.1480/mmBtu. European natural gas futures rose and then fell back, with the TTF Dutch natural gas futures, the European benchmark, falling by 1.09% to 39.365 Euro/MWh. ICE UK natural gas futures fell by 1.46% to 95.320 pence/therm, rising and falling throughout the day.
US PPI data fell, and the US dollar and US bond yields softened, boosting gold slightly by more than 0.1% and approaching a new historical high:
Gold: COMEX December gold futures closed up 0.11% at $2,506.8 per ounce. Due to some profit-taking, spot gold hit a daily low of nearly 0.55%, falling below $2,460 in early European trading, then rose nearly 0.2% to above $2,470 in pre-market trading, approaching the historical high of $2,483.60 touched on July 17 and has risen by 20% this year.
Silver: COMEX September silver futures fell 0.31% to $27.92 per ounce at the end of trading. Spot silver hit a high of more than 0.33% in Asia and rose above $28, then continued to fall, and fell nearly 1.8% to above $27.5 in pre-market trading.
London industrial base metals generally fell. The "copper doctor" fell $68 to $8,958/tonne. LME zinc fell by about 1.97%, LME tin by about 1.17%, while LME aluminum rose by nearly 1.13%, LME nickel fell by $34, and LME lead fell by more than 2.78%.
Analysis shows that although gold prices have seen some profit-taking, continued geopolitical tensions, rate cut expectations, and market volatility have boosted investor demand for safe haven assets, supporting higher gold prices. Deutsche Bank said that tomorrow's US inflation data may again raise rate cut expectations, further pushing up gold prices. Therefore, reaching new highs for gold prices is only a matter of time.
Editor/Jeffy