FX168 Financial News Agency (North America) Information This report is from today's CNBC Daily Open, which is CNBC's international market communication.
Breathing Room for Rebound
The US market fell on Tuesday, impacted by the decline in semiconductor stocks and a 8.1% drop in UnitedHealth. Most of the Asia-Pacific stock markets fell on Wednesday. Asian chip stocks such as Tokyo Electron and **** semiconductor manufacturers fell due to disappointing forecasts from ASML and reports of potential US export controls on AI chips.
ASML Plunges
Semiconductor equipment manufacturer ASML's stock price plummeted 16% due to a pessimistic earnings report. The Netherlands-based company expects its net sales in 2025 to be in the lower half of its previous forecast. ASML's net order volume for the September quarter was lower than expected at 3 billion euros, but net sales exceeded expectations.
Superior to ChatGPT
Alibaba updated its AI translation tool based on the Marco MT model on Wednesday. According to the benchmark testing tool FLoRes evaluation, the Chinese e-commerce giant stated that its product outperformed Google and DeepL. Alibaba's AI translation tool supports 15 languages.
Banks Exceed Expectations
Goldman Sachs, Bank of America, and Citigroup's earnings and revenues in the third quarter exceeded expectations. Goldman Sachs performed remarkably well: its profit increased by 45% compared to the same period last year. Net income of Bank of America decreased by 12% compared to the same period last year, while net income of Citigroup dropped by 8.6%.
Repositioning to address the slower rate cuts.
The strong job report and higher-than-expected inflation data in September suggest that the Fed is unlikely to repeat its massive 50 basis points rate cut at the November meeting. Here are the ways strategists are repositioning in response to the change in rate cut expectations.
Bottom Line
Despite the market downturn on Tuesday, there are still many commendable aspects in the current situation.
Due to ASML's sharp 16% decline and Bloomberg's report on potential AI chip export controls, semiconductor stocks like Nvidia and AMD fell by 4.7% and 5.2% respectively. This caused the VanEck Semiconductor ETF to have its worst day since September 3. As a result, the tech-heavy Nasdaq Composite Index fell by 1.01%.
Dow Jones Industrial Average
Just closed above 43,000 points yesterday, hitting a new historical high, but today fell by 0.75%, dropping back to 42,000 points. UnitedHealth Group dropped by 8.1%, dragging down the Dow Jones Index. Finally, the S&P 500 Index fell by 0.76%.
Optimistic sentiment.
Nevertheless, according to the global fund manager survey conducted by Bank of America in October, investors' optimism has reached the highest level in four years. They are also optimistic about the economy: 74% of investors believe that the USA will avoid a recession.
Michael Hartnett, an investment strategist at Bank of America, stated that expectations for further interest rate cuts by the Fed and hopes for Beijing to introduce more stimulus measures to boost the economy are driving investor sentiment higher.
In fact, Mary Daly, President of the San Francisco Fed and a member of the Federal Open Market Committee this year, pointed out that the Fed is 'far from the level where rates could stabilize.' This means that 'the real decision we need to make is how quickly to adjust to that level' - rather than deciding whether to maintain high rates based on recent strong economic data.
Another positive signal for the market is that the S&P 500 and Dow Jones indexes hit historical highs on Monday, but the Nasdaq index is only a few percentage points away from its peak. Piper Sandler's Chief Market Technician, Craig Johnson, wrote: 'This subtle divergence is technical evidence that the market has moved away from the Magnificent 7 technology giants.'
