In August, the PPI in the United States showed a cooling down of inflation, and the market slightly raised its bets on the Fed's aggressive interest rate cuts. US stocks rose together, with Nvidia up nearly 2%, while NIO Inc and XPeng fell more than 5%. The European Central Bank cut interest rates for the second time this year, but maintained a restrictive policy. European bonds fell, and the euro rebounded from its four-week low. Commodities rose across the board, with US oil briefly rising by 3.7%, gold reaching a new high with a nearly 2% increase, palladium rising by over 4%, and copper experiencing its largest two-month increase.
The major U.S. stock indices collectively rose and closed at the daily high. Investors bought small-cap stocks and large-cap technology stocks, with the small-cap index and the Nasdaq 100 index closing up 1.22% and 0.97% respectively, outperforming the large-cap indices. Broadcom, Meta, Google, Nvidia and other technology stocks performed well.
The three major U.S. indices all rose: the S&P 500 index closed up 41.63 points, or 0.75%, at 5595.76 points. The Dow Jones Industrial Average, closely related to economic cycles, closed up 235.06 points, or 0.58%, at 41096.77 points. The Nasdaq, which is mostly made up of technology stocks, closed up 174.15 points, or 1.00%, at 17569.68 points. The Nasdaq 100 closed up 0.97%. The Nasdaq Technology Market Cap Weighted Index (NDXTMC), which measures the performance of the Nasdaq 100 technology component stocks, closed up 1.02%. The Russell 2000 index, which is more sensitive to economic cycles, closed up 1.22%. The VIX fear index fell 3.50% to 17.07.
Almost all U.S. industry ETFs closed up. The global aviation industry ETF rose by 1.37%, the internet stock index ETF by 1.27%, the consumer discretionary ETF by 1.13%, the energy industry ETF, the technology industry ETF, and the global technology stock index ETF all rose by at least 0.8%, with the semiconductor ETF having the smallest increase at over 0.2%, while the biotechnology index ETF fell by 0.04%.The S&P 500 index saw all 11 sectors rise. The real estate sector closed up 0.1%, the financial sector closed up 0.12%, the utilities sector closed up 0.17%, the health care sector closed up 0.31%, the consumer staples sector closed up 0.56%, the industrial sector closed up 0.72%, the IT/technology sector closed up 0.82%, the materials sector closed up 0.91%, the energy sector closed up 0.94%, the consumer discretionary sector closed up 1.15%, and the communications services sector closed up 2.01%.
The 'Magnificent 7' technology stocks all rose. Nvidia closed up 1.92%. Amazon closed up 1.34%, Microsoft closed up 0.94%, 'meta' Metaverse closed up 2.69%, Apple closed up 0.05%, Tesla closed up 0.74%, Google Class A shares closed up 2.34%. Gemini Data Inc., a California-based AI company, sued Google, accusing its robot chat tool Gemini of stealing the company's trademark.
Chip stocks fluctuate. The Philadelphia Semiconductor Index fell by 0.24%. The industry ETF SOXX fell by 0.44%; the NVIDIA double leverage ETF rose by 3.97%. ON Semiconductor fell by 1.77%, Intel fell by 1.43%, KLA Corp fell by 2.08%, Qualcomm fell by 0.95%, Micron Technology fell by 3.79%, Arm Holdings fell by 0.81%, Marvell Technology fell by 0.79%, while ASML Holding remained flat. Broadcom rose by 3.97%, Taiwan Semiconductor rose by 1.07% in the US market, and AMD rose by 0.61%.
AI concept stocks rose more than fell. Oracle rose by 2.67% to set a new closing high. C3.ai rose by 6.82%, Dell Technologies rose by 3.08%, CrowdStrike rose by 1.41%, Palantir rose by 0.17%, Snowflake rose by 0.88%, SoundHound AI, an AI voice company held by NVIDIA, rose by 0.62%, Serve Robotics rose by 5.92%, BullFrog AI remained flat, BigBear.ai remained flat, while Super Micro Computer fell by 0.73%.
China concept stocks fluctuated. The Nasdaq Golden Dragon China Index fell by 0.79% to 5615.46 points, breaking away from the highest closing level since August 21 of 5660.27 points. Among the ETFs, the China Technology Index ETF (CQQQ) fell by 0.64%. The China Internet Index ETF (KWEB) fell by 0.04%.
Among the popular China concept stocks, new energy vehicle companies performed poorly, with NIO falling by 5.71%, XPeng falling by 5.69%, Li Auto falling by 3.58%, and LiKang falling by 3.37%. New Oriental fell by 2.04%, Bilibili fell by 1.41%, NetEase fell by 1.27%, Trip.com fell by 0.38%, Tencent Holdings ADR fell by 0.17%, while Vipshop rose by 0.08%, Baidu rose by 0.14%, JD.com rose by 0.34%, Mengniu Dairy ADR rose by 0.57%, Alibaba rose by 0.8%, Meituan ADR rose by 1.91%, and Pinduoduo rose by 2.15%.
Other key stocks: (1) Adobe's third-quarter performance exceeded expectations, but the fourth-quarter guidance was not good, and the stock price fell by more than 10% after-hours. (2) Oracle executives expect revenue of at least $66 billion in fiscal year 2026. By fiscal year 2029, revenue will be at least $104 billion, and EPS will increase by 20%. Oracle's stock price rose more than 6% after-hours. (3) Eli Lilly rose by 1.53% and invested $1.8 billion in expanding its Irish factory to increase production of weight loss drugs. (4) Berkshire Hathaway Class A fell by 0.69%, and Ajit Jain, Warren Buffett's key deputy, reduced his holdings of Berkshire Hathaway Class A shares by more than half.
European stocks rise after European Central Bank rate cut:
The pan-European Stoxx 600 index rose 0.8% to 512.08 points. Most sectors rose, with technology stocks and mining stocks up 2% and 2.38% respectively. Among the components, the stock price of Novo Nordisk rose 3.08% at one point during intraday trading, marking the largest single-day increase in a month. It then slightly retraced its gains and closed up 2.66%. There are reports that the company's experimental weight-loss drug may be more effective than the existing Wegovy injection.
The German stock index rose 1.03%. The French stock index rose 0.52%. The Italian stock index rose 0.84%. The Spanish stock index rose 1.08%. The UK stock index rose 0.57%.
The PPI report was mixed, with weak demand at the auction for 30-year treasury bonds. Timiraos' article has attracted a lot of attention. US bond yields rose across the board, with the yields on medium- to long-term US bonds rising by more than 2 basis points. ECB President Lagarde warned that 'rates will remain restrictive'. The yield on 2-year German bonds rose more than 7 basis points on 'ECB rate cut day'.
US bonds: At the end of the session, the yield on 2-year US bonds, which is more sensitive to monetary policy, rose by 0.40 basis points to 3.6455%, hitting a daily low of 3.6102% at 20:41 and then hitting a daily high of 3.6995% at 00:41. The yield on the benchmark 10-year US Treasury note rose by 2.62 basis points to 3.6796%. When the ECB announced the rate cut (the 'shoe dropped') at 20:15 Beijing time, it rebounded to 3.67%, but fell to 3.6347% at 20:30 when the US PPI data was released. It then fluctuated and rose, hitting a daily high of 3.7040% at 01:24.
European bonds: The yield on the benchmark 10-year German bond in the eurozone rose by 3.9 basis points. After the ECB announced the rate cut at 20:15 Beijing time and before the release of the US PPI data at 20:30, it fell. ECB President Lagarde's news conference hit a daily low of 2.097%, then rebounded and hit a daily high of 2.160% at 22:56. The yield on 2-year German bonds rose by 7.3 basis points, the largest increase in four weeks. The yield on French 10-year treasury notes rose by 2.2 basis points, and the yield on Italian 10-year treasury notes rose by 0.1 basis points. The yield on UK 10-year treasury notes rose by 2.0 basis points, and the yield on 2-year UK bonds rose by 2.7 basis points.
Due to disruptions in oil production caused by Hurricane Fred in the Gulf of Mexico, US oil rose over 3.7% during the session, approaching the $70 mark.
Crude oil futures for WTI October rose $1.66, or 2.46%, to $68.97 per barrel. Crude oil maintained its upward trend throughout the day, with US stocks surging more than 3.7% in early trading, approaching the $70 mark.
Brent crude oil futures for November rose $1.36, or 1.92%, to $71.97 per barrel. Brent crude oil maintained its upward trend throughout the day, with US stocks surging more than 3.2% in early trading, approaching the $73 mark.
On the news front, the International Energy Agency (IEA) released its monthly report showing that oil demand is expected to grow by 0.8 million barrels per day in the first half of 2024, the lowest level since the pandemic. Even if OPEC+ completely cancels its plan to restore daily production of 2.2 million barrels next year, it will still not be able to avoid oversupply. HSBC stated that no matter what supply measures OPEC+ takes, they are likely to hurt oil prices. If OPEC+ cancels the production cuts, it may lead to a large oversupply in 2025. On the other hand, although maintaining the production cuts may initially help raise prices, it may also be seen as an implicit acknowledgment of weak global demand growth.
Natural gas futures for October in the United States rose 3.83% to $2.3570 per million British thermal units. Data from the US Energy Information Administration (EIA) showed that EIA natural gas inventories increased by 40 billion cubic feet last week, with a week-on-week increase of 1.20% (compared to a 0.39% increase the previous week), to 3.39 trillion cubic feet (compared to 3.35 trillion cubic feet the previous week).
Market expectations of a Fed rate cut next week and a weak US dollar boost gold prices, which rose nearly 2% to a record high.
Gold futures for COMEX December rose 1.78% to $2587.60 per ounce at the closing, reaching a new historical high of $2588.50 per ounce. Spot gold continued its earlier gains, rising to a high of $2560.13 per ounce, up about 1.9%, and ultimately closing at $2558.07 per ounce, up 1.84%.
Silver: COMEX December silver futures rose by 4.48% in the post-market trading, to $30.225 per ounce. Spot silver maintained an upward trend throughout the day, rising after the release of the US August PPI and initial claims data. It surged over 4.3% to break through $29.90 and ended with a 4.19% gain, at $29.8792 per ounce.
London industrial base metals collectively rose. The economic indicator 'Dr. Copper' rose by over 1.37% to $9216 per ton. London zinc rose by over 3.10%. London nickel closed up $24. London aluminum rose by about 1.90%. London tin rose by over 1.49%, and London lead rose by 1.91%.
COMEX copper futures rose by 1.65%, to $4.2105 per pound.
Editor/Somer
