Nasdaq hits a two-week low, S&P ends flat, Dow rebounds; energy sector rises by over 1%, IT sector leads the decline for two days; Dell's strong performance after-hours briefly jumps by over 8%; Chinese concept stocks bounce back by over 2%, Li Auto rises over 10%, PDD rises nearly 5%. After the U.S. unemployment data, the 2-year U.S. treasury yield quickly rises. After the U.S. GDP, the US dollar index accelerates to a one-week high; gold turns short-term negative, but later hits a historical high. Offshore RMB rises by over 480 points, breaking 7.09 for the first time in over three weeks. Crude oil reverses two consecutive declines, with U.S. oil briefly rising by over 3%. Base metals suffer back-to-back declines.
Thanks to the surge in personal consumer spending, the annualized quarterly GDP growth rate in the U.S. for the second quarter has been revised up from 2.8% to 3%, higher than the expected 2.8%, showing greater resilience in the U.S. economy; the weekly U.S. jobless claims have slightly decreased by 2000 compared to the previous week, easing concerns about an economic recession. The U.S. housing market leading indicator, existing home contract signings, remains sluggish, falling to the lowest level on record in July due to high property prices and the continued scare of buyers by high lending costs.
In 2024, FOMC voter and Federal Reserve Bank of Atlanta President Bostic said that they are still awaiting data to ensure that it is time for the FOMC to cut rates. Also in 2024, Fed official Barkin said that inflation is decreasing and has not reached expectations, but progress is being made.
After the economic data was released, the expectation of a rate cut cooled slightly. The CME FedWatch tool indicated that the probability of a 50 basis point rate cut in September has fallen from 38% to 33%, while the probability of a 25 basis point rate cut has increased. U.S. bond yields rise short-term, with the U.S. dollar index rising to an intraday high of 101.578, while the offshore RMB remains over 380 points higher, breaking 7.1.
Signs of economic resilience boost U.S. stocks, with a morning rise across U.S. stock indices. Most tech, semiconductor, and AI concept stocks rise, leading to a more than 1.3% increase in the Nasdaq index. Among the seven tech giants, only Nvidia falls, but midday investors start selling tech stocks, and Nvidia's decline deepens, dragging down the Nasdaq and S&P indices. Due to the positive impact of rate cuts expectation, small cap stocks lead the way. Bulk commodities are generally up, driven by reports of Libyan supply disruptions and a planned reduction in Iraq in September, following a two-day dip in oil prices. Gold and silver futures both rise by over 0.6%.
Internationally, due to Germany's August CPI preliminary value of 1.9%, lower than market expectations, hitting a new low since March 2021, the euro briefly declines. The President of the Bundesbank warned that the inflation target has not been reached yet, and the European Central Bank must not cut interest rates too quickly, and it is expected that the state of inflation higher than the target will continue until 2025.
As the U.S. earnings season officially ends, market focus shifts from individual company performance to the Fed's September rate cut decision. Investors are paying attention to Friday's Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred measure of inflation, with Wall Street expecting the data to rise by 2.7% year-on-year and 0.2% month-on-month.
Small-cap stocks led the gains, with the Dow hitting a new closing high after one trading day, while NVIDIA fell 6.38%, dragging down the Nasdaq and chip stocks. The S&P Nasdaq initially rose but fell in the final trading session.
The three major US indices had mixed performances: the S&P 500 closed almost flat, with a slight decline of 0.22 points, at 5,591.96. The Dow, closely related to the economic cycle, rose 243.63 points or 0.59%, to 41,335.05. The tech-heavy Nasdaq fell 0.23% to 17,516.43. The Nasdaq 100 fell 0.13%. The Nasdaq Technology Market Cap Weighted Index (NDXTMC), which measures the performance of Nasdaq 100 tech stocks, fell 0.48%. The Russell 2000, which is more sensitive to the economic cycle, rose 0.66%. The fear index VIX fell 8.47% to 15.66.
US industry ETFs had mixed performances at the close. Energy industry ETFs and global aviation industry ETFs rose more than 1%, while financial industry ETFs and internet stock index ETFs rose nearly 1%. Utility ETFs rose more than 0.5%. However, semiconductor ETFs fell more than 1%, while technology industry ETFs and global technology stock ETFs fell by nearly 1%, and daily consumer goods ETFs fell 0.5%.
Most of the 11 sectors of the S&P 500 index closed higher. The energy sector rose 1.26%, the financial sector rose more than 0.8%, the consumer discretionary sector rose 0.2% with the smallest increase, while the telecom sector fell 0.22% with the smallest decline. The information technology/tech sector fell 0.74%, ranking last.
Most of the 'Tech Big Seven' stocks rose. NVIDIA fell 6.38%, losing $197 billion in market value in a single day, while Alphabet Class A fell 0.66%, Microsoft rose 0.61%, Apple rose 1.46%, 'metaverse' Meta rose 0.28%, Amazon rose 0.77%, and Tesla rose 0.26%.
It is worth mentioning that Apple, NVIDIA, and Microsoft are all in talks to join the new round of financing for OpenAI, which will result in a valuation of over 100 billion USD. OpenAI has announced that the weekly active users of ChatGPT has exceeded 200 million. The usage of ChatGPT has doubled since last year.
NVIDIA's stock price initially soared to $128 due to its impressive earnings in the second quarter, but it subsequently fell over 6% and lost nearly 200 billion USD in market value due to the market's disappointment with the company's third-quarter performance expectations.
Chip stocks experienced mixed results. The PHLX Semiconductor Index declined by 0.6%; the industry ETF SOXX declined by 0.29%; the NVIDIA twice leveraged ETF declined by 12.91%. ON Semiconductor rose by 2.24%, Applied Materials rose by 0.05%, Marvell Technology rose by 2.05%, Micron Technology rose by 0.75%, Intel rose by 2.65%, ASML Holding rose by 5.27%, while ASML ADR fell by 0.05%, KLA Corp fell by 1.06%, Broadcom fell by 0.79%, TSMC US stock fell by 0.03%, Qualcomm fell by 1.37%, and AMD fell by 0.59%.
It is worth mentioning that Marvell Technology's second-quarter loss per share has narrowed, and its performance guidance is better than expected, causing the stock to rise by over 8.3% after hours.
AI concept stocks mostly rose. Snowflake rose by 2.31%, C3.ai rose by 0.26%, Oracle rose by 1.12%, Palantir rose by 2.11%, BullFrog AI rose by 2.97%, BigBear.ai rose by 3.18%, CrowdStrike rose by 2.83%, while SoundHound AI, an AI voice company in which NVIDIA holds shares, fell by 0.21%, Serve Robotics fell by 3.96%, and Dell Technologies fell by 0.74%.
It is noteworthy that Dell's second-quarter report exceeded expectations, with AI server sales increasing by over 80% compared to the previous quarter, and the stock price rose by over 8% after hours.
China concept stocks outperformed the general US market. The NASDAQ Golden Dragon China Index rose by 2.63%. In ETFs, the China Technology Index ETF (CQQQ) rose by 2.98%, and the China Internet Index ETF (KWEB) rose by 2.51%.
Among popular China concept stocks, on the day after the release of the financial report, Meituan's stock rose by 5.38%, boosted by better-than-expected second-quarter revenue and a share buyback plan. Morgan Stanley upgraded Meituan's rating from Neutral to Overweight, and expects Meituan to achieve faster profit growth than e-commerce platforms. Mengniu Dairy ADR rose by 10.7%, surging over 12.5% at one point during trading. Li Auto rose by 10.62%, XPeng rose by 8.1%, Xpeng rose by 7.28%, and NIO rose by 6.49%.
In addition, Gaotu increased by 17.78%, Noah Wealth increased by 14.7%, BOSS Zhipin increased by 12.51%, Pinduoduo closed higher by 4.77%, Bilibili closed higher by 4.17%, Vipshop closed higher by 2.37%, Trip.com closed higher by 1.19%, Netease closed slightly higher by 0.2%, Tencent Holdings ADR closed higher by 0.98%, Baidu closed higher by 1.77%, Alibaba closed higher by 1.76%, JD.com closed higher by 1.66%, while New Oriental closed lower by 2.74%.
European and American smallpox concept stocks fluctuated. In the US stock market, GeoVax Labs fell by 1%, Emergent BioSolutions remained flat, while SIGA Technologies fell by 0.33%. In Europe, Danish pharmaceutical company Bavarian Nordic (BAVA.DC) closed higher by 2.25%, and Swedish biopharmaceutical and biotech company Orphan Biovitrum AB (SOBI.SS) closed higher by 0.69%.
In other key individual stocks, (1) Reports stated that Dell is considering selling the U.S. cybersecurity company, Secureworks. SecureWorks rose by 27% during the trading day and closed 20.41% higher. (2) Best Buy closed higher by 14.11%, once rising by over 18.1% during trading. The company's second-quarter revenue exceeded market expectations. (3) GAP initially rose nearly 8.9% and closed higher by 1.65%, with second-quarter sales better than expected. (4) Autodesk's second-quarter report and third-quarter guidance were better than expected, and the full-year revenue guidance was raised, with the stock price rising by around 6% after trading. (5) 3D Systems' second-quarter report was not ideal, and the full-year performance guidance was lowered. The stock price fell by over 4% after trading.
European stock markets closed higher for the third consecutive day, with the technology sector leading with an increase of over 2%. The pan-European Stoxx 600 index approached its historical high, and the German stock index reached a new closing high, rising by over 9.08% from the bottom in late August.
The pan-European Stoxx 600 index closed 0.76% higher, approaching the historical highest closing level set on May 15th, and has rebounded by 7.7% from the low point on August 5th. The Euro Stoxx 50 index closed 1.08% higher. Most sectors rose, with tech stocks leading the way with a 2.05% increase.
Stock indices in several European countries rose, with the German stock index reaching a new closing high of 0.69%, rising by 9.08% from the low point on August 5th. The French stock index closed 0.84% higher, the Italian stock index closed 0.92% higher, the Dutch stock index closed 1.43% higher, the Spanish stock index closed 0.23% higher, and the British stock index closed 0.43% higher.
The U.S. government's upward revision of GDP data shows that the U.S. economy still has resilience. The number of unemployed people reflects a stable labor market. In addition, the poor auction of the 7-year U.S. bond pushed up bond yields by more than 2 basis points, with the 10-year U.S. bond yield reaching a one-week high of nearly 3.90%. The German CPI data showed a larger decline than expected, with the 2-year German bond yield dropping by 2.9 basis points.
U.S. Bonds: In the final trading session, the more rate-sensitive 2-year U.S. bond yield rose by 2.88 basis points, reaching 3.8939%. During trading, it fluctuated between 3.8485% and 3.9062%. When U.S. economic data such as the number of jobless claims and GDP were released, it quickly bounced back above 3.88% from below 3.86%, erasing the day's decline and turning positive. The benchmark 10-year U.S. Treasury bond yield rose by 2.66 basis points, reaching 3.8615%, fluctuating between 3.8140% and 3.8863% during trading. At 20:30 Beijing time, significant rebound occurred when U.S. economic data was released.
Eurozone benchmark 10-year German bund yield rose by 1.4 basis points, while the 2-year German bund yield fell by 2.9 basis points. The 10-year French treasury yield rose by 0.5 basis points, the 10-year Italian treasury yield rose by 0.7 basis points, the 10-year Spanish treasury yield rose by 0.5 basis points, and the 10-year Greek treasury yield rose by 0.3 basis points.
The US dollar index rose by about 0.3% on Thursday, the yen temporarily fell below 145, the offshore RMB rose by over 380 points, reaching 7.1 yuan.
The US dollar index (DXY), which measures against a basket of six major currencies, rose by 0.29% to 101.384 points, with an intraday trading range of 100.885-101.578 points.
The Bloomberg Dollar Index rose by 0.19% to 1232.12 points, with an intraday trading range of 1227.06-1234.32 points.
Most non-dollar currencies fell. The euro fell by 0.37% against the US dollar, the pound fell by 0.17% against the US dollar, and the US dollar rose by 0.58% against the Swiss franc. Among commodity currencies, the Australian dollar rose by 0.18% against the US dollar, the New Zealand dollar rose by 0.19% against the US dollar, and the Canadian dollar rose by 0.03% against the US dollar.
The yen fell by 0.27% against the US dollar to 144.98 yen, with an intraday trading range of 144.22-145.55 yen. It significantly fell at 20:30 Beijing time when the US GDP data was released. The yen rose by 0.10% against the euro to 160.62 yen, and by 0.09% against the pound to 160.65 yen.
Offshore Renminbi (CNH): The offshore Renminbi against the US dollar rose 386 points at the close, to 7.0943 yuan. The overall trading range in the session was between 7.1329 and 7.0847 yuan. During the European stock market session, when it rose to 7.0847, it broke the 7.09 mark for the first time since 'Black Monday' on August 5th. It rose by 482 points intraday. After the US GDP data release, as the US dollar strengthened, the Renminbi accelerated a partial reversal of its gains.
Cryptocurrencies rebounded. The largest market capitalization leader, Bitcoin, rose by 0.99% at the close, to $59,535.00. The second largest, Ethereum, rose by 0.24% at the close, to $2,539.00.
Due to escalating concerns about Libyan oil supply, coupled with reports of Iraq planning production cuts, oil prices rebounded after two days of declines. US oil closed up nearly 1.9% near $76, approaching the $76 mark. Brent crude closed up over 1.6% approaching $80. Throughout this month, US oil has been fluctuating between $71 and $80 per barrel.
US Oil: WTI October crude oil futures closed up $1.39, with a nearly 1.87% increase, at $75.91 per barrel.
Brent Oil: Brent October crude oil futures closed up $1.29, with an increase of over 1.64%, at $79.94 per barrel.
Intraday Performance: US oil and Brent oil maintained an overall upward momentum throughout the day, with minor declines during the European stock market session. US oil dropped over 0.6% to near $74 at its lowest, while Brent oil dropped nearly 0.7% to near $78. Subsequently, both continued to rise, with US oil rising over 3.2% near $77 as the US stock market hit daily highs, and Brent oil rising over 2.7% near $81. At the close, both oils retreated some of their gains.
On the news front, the Libyan National Oil Corporation stated that the country's oil production had decreased by 1.5 million barrels in the past three days, resulting in total losses of $120 million. By August 28th, production had fallen to 0.591 million barrels per day. Rapidan Energy estimates that the total interruption of Libyan oil production may reach 0.9 to 1 million barrels per day and could last for weeks. Other reports mentioned Iraq planning to reduce oil production from around 4.25 million barrels per day in July to about 3.9 million barrels per day in September. Iraq's oil production has been exceeding its quota of 4 million barrels per day agreed upon with OPEC and its allies.
Analysts suggest that Libya produces approximately 1.2 million barrels per day, with most of the crude oil exported to global markets. US oil may benefit the most from this supply interruption since for European buyers needing to replace Libyan crude supply, US oil is the best alternative. The interruption in Libyan crude supply, increased potential for Middle East conflicts, and the US Energy Information Administration's crude inventories dropping to an eight-month low are all bullish for oil prices. However, crude oil bulls should proceed with caution, as the longer the oil price rally continues, the higher the oil price goes, making it more likely for OPEC+ countries to gradually remove voluntary production cuts starting in October and reintroduce more than 0.5 million barrels of crude oil back into the market.
Natural gas: U.S. natural gas futures closed up 1.91% in September, at $2.1370 per million British thermal units.
Driven by strong expectations of a Fed rate cut in September, gold rose more than 0.6% on Thursday. Investors are waiting for the U.S. Personal Consumption Expenditures (PCE) data to look for clues to the extent of the rate cut:
Gold: COMEX December gold futures rose by about 0.9%, closing at $2560.30 per ounce. It was the 32nd day this year that it reached a new record high at the close, rising 0.67% at the end of the day to $2554.70 per ounce. Spot gold maintained an upward trend all day, reversing early gains in pre-market trading, dipping slightly by 0.04% at the lowest, then continuing to rise in late morning, rising nearly 1% to nearly $2530 in midday U.S. trading, and finally closing slightly up by 0.65% at $2520.83 per ounce, marking 32 days of continuous trading around the $2500 mark since August 16.
Silver: COMEX September silver futures rose by 0.68% at the end of the day, at $29.830 per ounce. Spot silver maintained an upward trend all day, opening slightly down by 0.07% in the Asian market, then continuing to rise, with European stocks rising nearly 1.9% to nearly $29.70 in early trading, and eventually falling back slightly by 1.01% at the close to $29.4198 per ounce.
Analysts say that recent economic and geopolitical uncertainties, combined with the U.S. presidential election, have boosted safe-haven demand and supported gold prices. Prior to the Fed's interest rate meeting in September, the gold market may trade sideways and fluctuate. Once the PCE data cools and boosts rate cut expectations, gold prices will rise.
London industrial base metals collectively fell for the second consecutive day. Dr. Copper, an economic indicator, closed down $16 at $9244 per ton. LME aluminum fell by more than 1.52%, LME zinc fell by $3, LME lead fell by about 2.40%, LME nickel fell by $16, and LME tin fell by about 0.80%.
Editor/Lambor