Source: Sina US Stocks On the evening of the 20th Beijing time, the US stocks opened mixed on Thursday, and then the three major indexes rose slightly. Nvidia hit another new high and consolidated its position as the largest market cap company in the US stock market. Initial jobless claims in the United States last week were higher than expected, and real estate and manufacturing indexes were below expectations. Until the manuscript was submitted, the S&P 500 index rose 0.29% to break through 5500 points, the Nasdaq Composite Index rose 0.37%, and the Dow Jones Index rose 0.13%. The US stock market was closed on Wednesday due to the June holiday (Juneteenth). On Tuesday, the S&P 500 index and the Nasdaq both set new historical highs. The US stock market is expected to record gains this week. The S&P 500 index set its 31st new high this year on Tuesday. Due to the continued AI craze and the resilience of economic growth, it is expected to continue to support corporate profits, especially in the technology sector. Nvidia's stock price hit another new high. The AI darling and chip maker surpassed Microsoft last Tuesday and became the world's most valuable company. Against the background of the continued AI craze boosting the stock market, Nvidia's stock price has risen 174% from 2024 to date. As Nvidia consolidates its position as a thriving market leader in the AI theme market, its market value has surpassed that of Apple in early June. "Nvidia is still the most important stock in the world," said Chris Weston, head of Pepperstone research, in a report. However, Weston warned that the overall performance of the index market was poor, and the market participation was mediocre, suggesting that the rise was built on an unstable foundation. "The fact remains that the market is still very bullish on AI-related stocks and large tech stocks, and given the lack of clear immediate risks, the path of least resistance is for stock indices to rise." While consumer spending has shown signs of slowing and hints at potential economic weakness, investors continue to flock to the AI giant. The rise of Nvidia has also boosted its peers. Chip maker Broadcom has surged more than 60% from 2024 to date. Scott Chronert, Citigroup's US stock strategy director, wrote in a report on Tuesday: "We still believe that Wall Street (the S&P 500) is diverging from the corporate sector (the foundation of the US economy), is this strange? There is no doubt that generative AI is currently infiltrating the US stock market environment as a sustained driver of growth." Nevertheless, some commentators have noted that while this doldrums has not yet fully affected the US stock market, which repeatedly sets new highs, the rise lacks breadth beyond the largest tech companies, and this situation may continue to deteriorate. Thomas Fitzpatrick, managing director of R.J. O'Brien and Associates, said, "There's a feeling of AI theme that's very similar to the 2000-2001 US stock style, but as we know, markets stay irrational longer than you stay solvent. But for now, it's hard to stop the speeding train." Sam Stovall, chief investment strategist at CFRA Research, said that due to three major unfavorable factors that will suppress stock prices, the US stock market will see a correction. This Wall Street veteran pointed out that so far this year, the stock market has performed strongly, with the S&P 500 index up 15% from 2024. However, he predicted that the benchmark index would fall 5% due to unfavorable interest rates, inflation, and stock valuations. The inflation rate is declining but still above the Federal Reserve's target of 2%, leading Fed officials to expect only one interest rate cut by year-end. As for Thursday's economic data, the initial claims for unemployment benefits in the United States were almost unchanged last week, and the data for the previous week rose sharply. These data tend to fluctuate before and after holidays and school vacations. Data released by the US Department of Labor on Thursday showed that as of June 15, the number of initial claims for unemployment benefits decreased by 5,000 to 238,000. The number of continued claims for unemployment benefits as of June 8 rose to 1.82 million. In the past year, the number of people applying for unemployment benefits has remained low as the labor market has shown resilience in the face of high prices and high interest rates. The four-week moving average of initial jobless claims rose to 232,750, the highest level since September last year.

On the evening of September 9th (Beijing time), US stocks opened higher on Monday. The major stock indexes attempted to recover some of the significant losses suffered last week. The market will focus on the August CPI and PPI inflation data this week to determine the extent of a possible interest rate cut by the Federal Reserve in September.

As of the time of writing, the Dow Jones Industrial Average is up 0.88%, the Nasdaq is up 1.07%, and the S&P 500 Index is up 0.76%.

Adam Crisafulli, an analyst at Vital Knowledge, said, "We believe that the rebound in US stocks is not driven by any specific news after Friday's close, but rather by some moderate buying on dips, largely driven by oversold conditions and expectations of monetary support."

US stocks had a tough start in September, suffering significant losses in the first trading week. The S&P 500 Index fell 4.3% for the week, marking its worst weekly performance since March 2023, the Nasdaq plunged 5.8%, its worst weekly performance since 2022, and the Dow Jones Industrial Average fell 2.9%.

Historically, September has been a difficult month for US stocks. The seemingly unstoppable rebound in US stocks is now showing signs of wavering, as the momentum that has propelled US stocks to new highs is facing a series of challenges.

Due to concerns about a recession in the US economy, the steep sell-off in early August revealed how quickly the situation can deteriorate, shocking investors who are accustomed to the stock market only going in one direction.

Although the S&P 500, as a benchmark stock index for the U.S., rebounded afterwards, the key is that it did not fully recover. The U.S. non-farm payroll report for August released last Friday showed weak job growth, further supporting the view that the labor market is cooling down and causing stock market fluctuations.

The U.S. data released last Friday showed a slowdown in job growth, exacerbating the view of a cooling labor market and leading to a sharp decline in the stock market.

The latest non-farm payroll report for August, which was just released, has led investors to determine that the U.S. labor market is slowing down and the risk of an economic recession is increasing. The economic data released last Friday showed that non-farm employment in the U.S. only grew by 0.142 million in August, below the average expectation of 0.161 million from economists surveyed by Dow Jones. The unemployment rate fell to 4.2%, in line with economists' expectations.

This week, investors will focus on two key inflation reports, which may provide further information for the Federal Reserve's decision at the next Open Market Committee meeting. The Consumer Price Index (CPI) for August and the Producer Price Index (PPI) will be released on Wednesday and Thursday respectively.

According to data from the CME Group's FedWatch Tool, the market is now predicting a 71% chance of a 25 basis point rate cut by the Federal Reserve at the next meeting, while the chances of a 50 basis point rate cut are only 29%.

Vincent Deluard, Global Macro Strategist at StoneX, believes that even if the consumer or producer price reports are weaker than expected, it is not enough to stimulate a larger rate cut.

Deluard said, 'It is expected that the CPI data for August will meet expectations, which will not change the guidance of the Federal Reserve. The PPI data is also not that important. Powell certainly wants to cut rates, but he is a rational person. A 50 basis point cut in September? Why take the risk?'

Louis Kuijs, Chief Economist for Asia Pacific at S&P Global, said, 'Although a rate cut by the Federal Reserve in September is almost certain, the question is about the future number and magnitude of rate cuts. The global economy faces many risks, which have an impact on the Federal Reserve's decision.'

JPMorgan strategist Michael Wilson believes that if the Federal Reserve cuts interest rates significantly this month, the US stock market may face the risk of further unwinding of yen carry trade.

Until May of this year, Wilson was still one of the largest stock market bears on Wall Street. He pointed out that if the Federal Reserve's first interest rate cut exceeds 25 basis points, the yen may receive support, prompting yen traders to withdraw from US assets after domestic interest rates rise, and causing a repeat of the turmoil that occurred last month in the global market.

Wilson wrote in a report: "The unwinding of carry trades in yen may still be a potential risk factor for US stocks. The rapid decline in short-term interest rates in the United States may further strengthen the yen, triggering a negative reaction in US risk assets."

The market is also concerned about the looming US government shutdown crisis. Majority Leader of the US Senate and Democratic Senator Schumer emphasized the importance of avoiding a government shutdown on September 30, as lawmakers are returning to Washington after the August recess, and the US presidential election will be held in November.

In a letter to Democratic colleagues on Sunday, Schumer stated that Democrats are inclined to short-term extensions of funding, namely continuing resolutions, and called on Republicans to support bipartisan cooperation.

Schumer said, "We will not let poison pills or Republican extremism endanger funding for critical projects." He said that both parties may legislate on issues such as annual authorization bills, railroad safety, lowering insulin and prescription drug costs, and artificial intelligence.

As for overseas central banks, the European Central Bank will announce its interest rate decision on Thursday. The bank cut interest rates by 25 basis points in June, and it is expected that this meeting will see another rate cut of the same magnitude.

Key sectors & stocks

Growth tech stocks rebounded collectively, with Tesla, Nvidia, and Taiwan Semiconductor up more than 3%, while Netflix, Qualcomm, and Amazon rose more than 2%.

Cryptocurrency concept stocks are strong, with MicroStrategy up nearly 8%, Coinbase up more than 6%, Marathon Digital, and CleanSpark up more than 5%.

Boeing has reached a preliminary labor agreement with its union, resulting in a nearly 4% increase in the company's stock price.

Dell Technologies and Palantir have been included in the S&P 500 index, with Dell rising nearly 5% and Palantir climbing almost 12%.

Editor/Lambor