Source: Wall Street See
Authors: Fang Jiayao, Du Yu, Jiang Zihan, Long Yue, Li Xiaoyin
Hawkish officials of the Federal Reserve support rate cuts in September, with the Nasdaq, small-cap stocks, and Chinese concept stocks rising more than 1%, chip stocks rising nearly 2%, and the S&P rising nearly 8% in eight days, the best in 11 and a half years. Berkshire Hathaway reaches a new closing high, with Nvidia and AMD up more than 4% and Tesla up more than 3%. The yen hit a two-week high, and offshore yuan rose 330 points, breaking through 7.13 yuan, the highest level this year. Crude oil fell about 3%, and spot gold remained steady at $2,500 but fell from its highs.
Ahead of the central bank annual meeting, Fed officials once again unanimously became doves. Daly, the president of the Federal Reserve Bank of San Francisco and a voting member in 2024, said that with increasing confidence in inflation, she supports gradual rate cuts. Kashkari, president of the Federal Reserve Bank of Minneapolis and a hawkish voting member in 2026, believes that the possibility of an excessively weak labor market is increasing, which should open the door for a rate cut in September. Chicago Fed Chairman Goolsbee also said on Sunday that no rate cut could harm the labor market. The market is still betting on a 25-basis-point rate cut in September.
US stocks have risen for eight consecutive days, with Nasdaq rising more than 10% since August 8th, the longest rising trend since November 2023, and the S&P has risen nearly 8% in eight days, the best in 11 and a half years. Nvidia rose 4.53%, leading the chip sector, pushing the Nasdaq up 1.39%. The major US stock indices and sectors all rose, and the upward momentum accelerated in the last few minutes of trading. Large tech, communications services and non-essential consumer goods performed well. According to Global Times, US Secretary of State Blinken visited Israel to push for a ceasefire in the Gaza Strip. The Gaza ceasefire talks are underway, and with weak demand prospects, energy stocks are under pressure.
The US dollar index fell below 102 to a seven-month low, and G10 currencies performed well. The yen rose 1.7% and led G10 currencies. Offshore yuan rose above 7.13 at one point, up nearly 350 points for the day. Investors are waiting for Fed Chairman Powell's speech at the Jackson Hole Symposium on Friday to seek more clues about rate cuts, and trading on Monday is light, with US bond yields almost unchanged.
Major US stock indices rose across the board, with small-cap stocks and the Nasdaq leading the way, while the Dow lagged behind, and Nvidia rose more than 24% in six days. Both the S&P and Nasdaq have risen for eight consecutive trading days, the longest rising cycle of the year, with the S&P up nearly 8% in eight days, the best since March 2003:
US stock indices accelerated their upward momentum at the end of trading: the S&P 500 rose 0.97% to 5,608.25 points. The Dow Jones Industrial Average rose 0.58% to 40,896.53 points. The Nasdaq rose 1.39% to 17,876.77 points. The Nasdaq Technology Market Cap Weighted Index (NDXTMC), which measures the performance of the Nasdaq 100 technology component stocks, rose 1.55%. The Russell 2000 index rose 1.19%. The VIX fear index fell 1.01% to 14.65, and rose to 16.07 at the beginning of the European market.
US industry ETFs closed up across the board. The biotechnology index ETF rose more than 2%, the semiconductor ETF, technology industry ETF, global aviation industry ETF and global tech stock ETF rose at least 1.5%, and the internet stock index ETF, optional consumer ETF, regional bank ETF, and bank ETF rose 1% up and down.
All 11 sectors of the S&P 500 Index closed up. The telecom sector rose 1.44%, the information technology/tech sector rose 1.44%, the optional consumer sector rose 1.14%, and the energy sector rose 0.42%, the second worst performance.
"Magnificent 7" technology companies have rebounded strongly, with only Apple falling. Nvidia rose 4.35%, accumulating more than 24.10% in the past six trading days, and rebounding more than 31.43% since the closing on August 7th; Tesla rose 3.12%, Google Class A rose 2.28%, Microsoft rose 0.73%, Amazon rose 0.66%, and Meta rose 0.35%, while Apple fell 0.07%.
Chip stocks generally rose. The Philadelphia Semiconductor Index rose 1.86%; the industry ETF SOXX rose 1.7%; Nvidia's double long ETF rose 8.68%. On Semiconductor rose 2.48%, AMD rose 4.52%, Qualcomm rose 1.21%, ASML Holding ADR rose 1.58%, KLA Corp rose 0.11%, Arm Holdings rose 1.54%, Broadcom rose 1.2%, Applied Materials rose 1.46%, and Taiwan Semiconductor ADR rose 0.52%. Intel rose 3.11%. Micron Technology rose 0.59%. Wolfspeed, Silicon Laboratories rose up to about 3.8%, and Xilinx rose more than 1.4%.
It is noteworthy that AMD announced on Monday that it plans to pay $4.9 billion to acquire ZT Systems, a company that designs cloud computing and artificial intelligence data center equipment, challenging Nvidia's dominant position in AI computing.
AI concept stocks rose more than fell. Dell Technologies rose 0.51%, Oracle rose 0.33%, CrowdStrike rose 1.61%, Palantir rose 1.31%, Snowflake rose 2.64%, BullFrog AI rose 1.95%, C3.ai rose 0.51%, BigBear.ai rose 8.73%, Serve Robotics, an AI robot delivery company owned by Nvidia, rose 4.12%, while SoundHound AI, an AI voice company owned by Nvidia, fell 0.4%. Super Micro Computer, the “AI demon stock”, fell 0.82%.
China concept stocks rose generally. The Nasdaq Golden Dragon China Index rose 1.39%. In the ETFs, the China Technology Index ETF (CQQQ) rose 0.82%. The Chinese Internet index ETF (KWEB) rose 1.26%.
Among the popular Chinese concept stocks, JD.com rose 0.85%, Li Auto rose 4.58%, Alibaba rose 0.88%, Bilibili rose 3.4%, Baidu rose 1.37%, Geek+, rose 5.8%, NetEase rose 2.94%, Nio rose 3.04%, PDD Holdings rose 1.22%, Xiaopeng rose 3.75%, while New Oriental Education fell 1.97% and Tencent ADR fell 0.25%.
Smallpox epidemic concept stocks rose and fell differently. In the US stock market, GeoVax Labs (GOVX) once rose more than 58.3%, but finally rose 1.27%, Emergent BioSolutions (EBS) rose 12.66%, SIGA Technologies (SIGA) fell 0.48%. In Europe, Danish pharmaceutical company Bavarian Nordic (BAVA.DC) fell 4.59%, and Orphan Biovitrum AB (SOBI.SS), a Swedish biopharmaceutical and biotechnology company, rose 0.45%.
Among the stocks announcing financial reports, Estee Lauder fell 2.23%, with fourth-quarter sales slightly better than expected, but earnings per share adjusted for 2025 were lower than market expectations, falling nearly 10% in pre-market trading.
In other key stocks: Berkshire Hathaway hit a new high. Trump Media (DJT) fell 3.6% to $22.24, a new low in closing since the US listing in March. General Motors rose nearly 1% and plans to cut more than 1,000 salaried workers in its software and service department.
After the active recovery last week, European stocks rose again on Monday:
The pan-European Stoxx 600 index rose 0.61%, approaching the highest closing level since July 31, with a cumulative rebound of 5.65% since the closing on August 5. All sectors rose on Monday, with mining and retail stocks leading, rising 1.98% and 1.57% respectively. European luxury goods and automobile concept stocks rose, and Kering, LVMH, Burberry, Hugo Boss, Swiss Lindt, etc. rose more than 2%. However, reports of Ukraine aid have caused market concerns, and European defense stocks have fallen.
European stock indexes rose generally, with the German stock index up 0.54%, the French stock index up 0.70%, the UK stock index up 0.55%, the Italian stock index up 0.68%, the Dutch stock index up 0.35%, and the Spanish stock index up 1.40%.
Before Powell's speech, trading was light, and on Monday, US Treasury yields were almost flat, with medium- and long-term US Treasury bond yields falling more than 2 basis points:
US Bonds: At the close, the two-year US Treasury bond yield, which is more sensitive to monetary policy, rose 1.21 basis points to 4.0618%, trading in the range of 4.0324%-4.0812% during the session. The yield on the benchmark 10-year US government bond fell 2.28 basis points to 3.8597%, trading in the range of 3.9073%-3.8502% during the session.
Eurozone benchmark 10-year German bond yield fell 0.1 basis points. 2-year German bond yields were flat. French 10-year Treasury yields fell by 1.0 basis points, Italy's 10-year Treasury yields fell by 1.9 basis points, Spain's 10-year Treasury yields fell by 1.4 basis points, and Greece's 10-year Treasury yields fell by 1.2 basis points. 2-year UK bond yields rose by 0.9 basis points. UK 10-year Treasury yields fell by 0.4 basis points.
Investors are waiting for Powell's speech, and the US dollar index fell 0.6% to a seven-month low of 102, and the yen rose to a two-week high of 145 during intraday trading. Offshore renminbi rose 295 points to pressure 7.13 yuan, and rose 330 points at one point and rose above 7.13 yuan, the highest point of the euro this year:
The US Dollar Index (DXY), which measures the dollar against six major currencies, fell 0.58% to 101.868, trading in a range of 102.484-101.851 throughout the day, down for the first time since January 5 below the 102 level, approaching the December 28, 2023 low of 100.617 and last trading below 100 psychological support was on July 19, 2023.
The Bloomberg Dollar index fell 0.47% to 1232.62, trading in a range of 1238.71-1232.13 throughout the day, approaching 1230 points and the March 8 low of 1225.12.
Non-US currencies generally rose. The euro rose 0.55% against the US dollar, the pound rose 0.37% against the US dollar, the US dollar fell 0.41% against the Swiss franc, the Australian dollar rose 0.92% against the US dollar, the New Zealand dollar rose 0.99% against the US dollar, and the US dollar fell 0.33% against the Canadian dollar. The emerging market currency index hit a record high, and Bank of America said European investors were shorting the US dollar after market turmoil.
Yen: The US dollar fell 0.68% to 146.62 yen, trading in a range of 148.05-145.19 yen throughout the day. The euro fell 0.17% against the yen to 162.53 yen; the pound fell 0.31% against the yen to 190.500 yen.
Offshore renminbi: Offshore renminbi (CNH) rose 295 points to close at 7.1336 yuan against the US dollar, trading overall between 7.1645-7.1278 yuan throughout the day.
Cryptocurrencies fluctuated. Bitcoin, the largest market capitalization, fell 1.29% to $59,215.00. The second largest Ethereum was roughly flat at $2,625.00.
The US push for a Gaza ceasefire alleviated concerns about crude oil supply, and weak oil demand prospects put pressure on the oil market. US oil fell 3% to a two-week low of $74, and Brent oil fell below $78, but US natural gas rose more than 5%.
US crude oil futures for September closed down $2.28, or over 2.97%, to $74.37 a barrel. US oil maintained its downward trend throughout the day, with US stocks rising nearly 0.3% to nearly $77 in early trading, then accelerating their decline, with US stocks falling nearly 3.2% at their deepest point and hitting $74 a whole number before the US stock market closed.
Brent crude oil futures for October closed down $2.02, or nearly 2.54%, at $77.66 a barrel. Brent oil followed a similar trend to US oil, rising nearly 0.2% at its highest point and falling nearly 2.8% to below $77.50 a barrel at its lowest point.
On the news side, Hamas said on the 18th local time that Netanyahu was still hindering a Gaza ceasefire. Subsequently, according to Global Network reports, US Secretary of State Blinken arrived in Israel to promote a ceasefire in Gaza. Bank of America pointed out that with non-OPEC member countries' supply growth exceeding demand, the oil market is expected to face a supply surplus of 700,000 barrels per day next year, which will depress oil prices, and Brent's average price next year is expected to be $80 per barrel, down from $86 per barrel this year.
Natural gas: As temperatures have become hotter in most parts of the United States, boosting demand for cooling, US natural gas futures for September rose more than 5.27% to $2.2350 per million BTUs. A cumulative decline of 0.93% this week.
Spot gold showed a V-shaped reversal trend throughout the day. After spot gold hit a new historical high in the early Asian market, some investors took profit and caused the gold price to fall in the intraday session. Gold prices rebounded slightly at the end of the day but still fell by 0.15%:
Gold: COMEX December gold futures rose 0.19% at the end of the day, to $2542.70 per ounce, hitting a new historical high of $2549.90 per ounce in the early Asian market. Spot gold hit a new intraday high of $2509.94 per ounce as of 06:00 Beijing time when it opened for trading. European stocks and US stocks remained in a downward trend during midday in Europe and early trading in the US, with the deepest drop to around 0.9% at 21:36 Beijing time, and finally fell by 0.15% to $2504.18 per ounce at the end of the day.
Silver: COMEX September silver futures rose 1.55% at the end of the day, to $29.490 per ounce, with intraday gains of over 2% to a four-week high since July 24. The industrial attribute caused spot silver to follow the overall rise of London base metals, with early gains of nearly 1.6% in US stocks pushing it up to nearly $29.5. It closed at $29.4494 per ounce with a rise of 1.62% at the end of the day.
Analysis suggests that after the gold price soared to a new historical high, many Wall Street banks, such as Citigroup, sang the praises of gold targeting a price of $3000, partly due to the prospect of a "Fed rate cut," and partly due to the demand for safe-haven purchases driven by geopolitical tensions. However, some investors tend to take profit.
London industrial basic metals generally rose. The economic wind vane "copper doctor" closed up 1.49% at $9252 per ton. Zinc in London rose by about 0.87%, tin in London rose by more than 2.10%, and aluminum in London rose by about 3.38%. Lead in London closed up $2 and nickel in London rose by about 1.79%.
Editor/Jeffy