In the early morning of the 22nd Beijing time, US stocks closed with mixed ups and downs on Monday, with the Dow falling more than 340 points. Nvidia reached a new high. The market continues to pay attention to US stock earnings reports to further judge the state of the US economy. The governor of the Dallas Federal Reserve expressed support for “gradual” interest rate cuts, saying that the easing policy will help avoid excessive cooling of the job market and return inflation to the target.

The Dow closed down 344.31 points, or 0.80%, to 42931.60 points; the NASDAQ rose 50.45 points, or 0.27%, to 18540.01 points; and the S&P 500 fell 10.69 points, or 0.18%, to 5853.98 points.

Entering a new week, the US stock earnings season continues to advance. About one-fifth of the S&P 500 companies will release earnings this week.

The results of the US stock earnings report so far have been mixed. According to public data, 14% of the S&P 500 index constituent companies have announced their results. Among the companies that have announced results, 79% of the results exceeded expectations, and the performance was very lackluster.

US stocks closed higher last week, and the Dow and S&P 500 both hit record closing highs. The three major stock indexes all recorded sixth consecutive week of gains, and the Dow and S&P 500 both set the record for the best weeks of continuous gains in 2024.

Recently, US stocks have continued to rise, making investors optimistic that the stock market still has room for further development. Despite this, they still note that before the US presidential election and in the face of rising geopolitical risks, overvaluing US stocks may also mean further fluctuations.

Goldman Sachs strategists say the US stock market is unlikely to maintain the above average performance over the past decade as investors turn to other assets, including bonds, to seek better returns.

According to analysis by Goldman Sachs strategists led by David Kostin, the average annual nominal return of the S&P 500 index is expected to be only 3% over the next ten years. In contrast, the index's average annual return over the past decade was 13%, and the long-term average return was 11%.

They also believe that the probability of the S&P 500 falling behind treasury bonds is about 72%, and the probability of falling behind inflation by 2034 is 33%.

Sam Stovall, chief investment strategist at CFRA Research Institute, said, “If we don't actually get the kind of hard evidence that US stocks are worth such a high price, then we may eventually see these gains quickly digested.”

The market is still watching the prospects for the US presidential election.

The US presidential election, which is one of the most important events of the year, is just a few days away. For Wall Street, the confrontation between Harris and Trump has added more volatility to the market, and uncertainties such as interest rates, labor markets, and conflicts in Europe and the Middle East are enough to torment investors' nerves.

Although the approval ratings of the two candidates are almost unequal, so far, this uncertainty has not bothered investors much. The S&P 500 index hit a record high 47 times this year. After this election, the stock market may usher in another wave of gains, just like the situation during previous elections.

Predicting election results is actually about the same as tossing a coin, which makes it difficult for traders to bet on what is about to happen. Perhaps this is one of the reasons why betting sites such as PolyMarket and PredictIT are so interested in this.

Goldman Sachs's index tracking the trading strategies corresponding to the two parties' victory shows that in late September, the index tracking the Republican Party's winning trading strategy began rising at the end of September, while the index tracking the Democratic Party's victory declined.

Morgan Stanley believes that given the current policy outlook of the Federal Reserve, US Treasury bonds are well positioned to withstand any sell-off that might be triggered by a massive victory for the Republicans led by Trump.

The bank advised investors to maintain a neutral stance on US bonds before voting in the November 5 general election, saying that the market is unlikely to experience such a drastic reaction as after the Republican Party won the Senate and House of Representatives in 2016. Although that time triggered the market to bet that monetary policy would be greatly tightened, Morgan Stanley believes this time will be different.

A Morgan Stanley strategist led by Matthew Hornbach said, “Many investors think the outcome of the 'Republican Party sweep' is the worst situation for US Treasury bonds. Comparing current expectations of the Federal Reserve's policy with those in 2016, we think any rise in US Treasury yields will be more contained than at the time.”

The J.P. Morgan strategist quoted the bank's own indicators as saying that demand for the dollar surged last week because investors are betting that the dollar will rise on the eve of the US election, and this kind of buying is likely to continue.

America's inflation prospects and the Federal Reserve's monetary policy are still in the spotlight.

Dallas Federal Reserve Governor Logan expressed support for “gradual” interest rate cuts, saying that easing policies will help avoid excessive cooling of the job market.

Logan said on Monday: “If the economy meets expectations, interest rates are expected to be cut gradually. The Federal Reserve's monetary policy choices require a flexible response. The economy is strong and stable. The job market is expected to face downside risks, the inflation target is still at continued risk, and balance sheet cuts are moving in the same direction as interest rate cuts.”

Logan said, “There is still sufficient liquidity in the money market, and I'm not surprised that there have been some fluctuations in the money market. The Federal Reserve should tolerate a certain degree of currency market fluctuations. Money market interest rates are expected to be close to or slightly higher than reserve interest rates.”

Logan said, “Relaxed policies will help avoid excessive cooling of the job market, so that inflation can return to target in a sustainable and timely manner.”

He said, “If the economy develops according to my current expectations, then by gradually lowering policy interest rates to a more normal or neutral level, we can help manage risk and achieve our goals. However, any number of shocks could affect this path to normalization, including the speed of policy adjustments and the level at which interest rates should stabilize. In my opinion, the FOMC needs to be flexible and make adjustments when necessary.”

“As the budget deficit grows, marginal interest rates may rise; America's high inflation problem is not caused by the labor market,” Minneapolis Federal Reserve President Kashkari said on Monday.

He said that in the future, we will pay attention to all data to determine interest rate policies. “We definitely want to avoid a recession. We have already seen signs of weakness in the labor market, which is why the Fed cut interest rates by 50 basis points; looking forward to the future, we will pay attention to all data to determine interest rate policies.”

Kashkari said, “Economic resilience makes me wonder if neutral interest rates will be higher; signs of rapid weakness in the labor market may lead to faster interest rate cuts. Currently, I expect moderate interest rate cuts in the next few quarters.”

Kashkari believes that the main role of monetary policy in curbing inflation is to stabilize inflation expectations rather than directly reducing market demand.

He said, “It is unclear how long this environment of high interest rates will last. I am very happy that inflation is falling while the labor market is still strong. Committee members will adjust their positions as economic facts and understanding of economic dynamics change, and this is exactly what should happen.”

FHN Financial analyst Chris Low said on Monday that the US government's latest revenue statement shows why the huge budget deficit is an ominous sign for the economy.

He wrote that US revenue increased by $479 billion in the latest fiscal year, but the deficit continued to rise from $1.695 trillion to $1.832 trillion due to faster spending growth. In addition to higher welfare expenses and domestic investment, interest expenses are also a major factor.

Low observed that interest expenses increased by more than 33% in the most recent fiscal year. Lowe found that economists are increasingly worried that deficits will fuel inflation. He wrote, “The huge deficit in response to the pandemic evolved into a huge deficit in the pursuit of industrial policies, and sporadic hundreds of billions of dollars in student loan relief measures have increased the size of the deficit, and there is no clear end in sight.

Individual stocks in focus

Bank of America raised Nvidia's stock rating. In a recently released report, Bank of America analysts raised the target price target for Nvidia shares from $165 to $190. This means that the stock is still up 38% from its price of $138 when it closed last Friday.

Bank of America analysts pointed out that the AI market will grow exponentially in the next few years. They said that as the chip giant continues to consolidate its leading position in the market, this will bring “intergenerational opportunities” to Nvidia.

Analysts believe the AI accelerator market will grow to $280 billion by 2027. Moreover, over time, it will further grow to more than 400 billion US dollars, which is a significant increase from 45 billion US dollars in 2023. Bank of America predicts that as artificial intelligence models continue to grow rapidly — developers such as OpenAI, Google, and Meta launch new large-scale language models several times a year, “the demand for computation will only grow.”

Tesla will release its third-quarter earnings report after the US stock market this Wednesday. For Wall Street, the outcome could be a return to fundamentals, as some investors were disappointed with a highly hyped robotic campaign this month that was viewed as lacking in detail.

Tesla's stock price has dropped about 11% so far this year. Although the event was held at a film studio in Burbank, California, in an urbanized setting, first showcased Tesla's Cybercab robot taxi prototype, and promoted easier, autonomous future transportation to the public, Tesla still faced common problems — growing sales and profits, slowing demand, competition from emerging Chinese electric vehicle manufacturers, and Musk's ability to deliver on promises.

Barclays analysts previously pointed out that “at least for now, Tesla's focus has returned to fundamentals.” These fundamentals include Tesla's demand prospects and signs of stable profits. “However, given our expectations that the third quarter exceeded expectations and reminders of short-term stability, we think the results of the third quarter may be a positive catalyst in the short term,” the analyst said, adding that “profit margins have bottomed out.”

According to industry sources, AMD will hold a press conference from October 23 to 24 and may launch the Ryzen 7 9800X3D processor. According to the source, AMD's official promotional poster says “Legends are invincible, A-Club Leaders League Season Meeting (Zhuhai-Macau Twin Cities)”, and the AMD Ryzen 7 series logo can be seen in the small picture.

According to previous reports, the Ryzen 7 9800X3D processor scored 2145 points in the single-core Cinebench R23 test and 23,315 points in the multi-core test. Compared to the Ryzen 7 7800X3D processor, the single-core performance of this processor has increased by 20% and multi-core performance by 28%.

According to media reports on October 21, the prices of various models in the iPhone 16 series have been reduced. Currently, the “Double 11" promotion is about to begin. Many models owned by many manufacturers have already started big price cuts, and Apple is no exception.

According to reports, from 20:00 on October 21 to October 24 at the official Apple Tmall flagship store, you can receive a 500 yuan coupon for all iPhone 16 models. The starting price after the voucher was 5,499 yuan, while the starting price of the most popular iPhone 16 Pro Max model dropped to 9499 yuan. It is worth noting that this is also the first price reduction on official channels since the launch of the new model.

The media pointed out that in some third-party channels and e-commerce platforms, the iPhone 16 series still has more room for price adjustments.

Starting next month, Microsoft will allow its customers to set up autonomous AI agents. This is the company's latest move to utilize AI technology at a time when investors are increasingly scrutinizing its huge AI investments. According to information, Microsoft is positioning autonomous agents, programs that require human intervention, unlike chatbots, as “applications that drive the world through artificial intelligence.” These programs can be used to handle customer inquiries, identify sales leads, and manage inventory.

Other big tech companies such as Safrus are also praising the potential of such agents. Some analysts say companies are facing the dilemma of monetizing the billions of dollars invested in AI, and these tools can provide an easier way to do this.

Google's procurement of 6-7 nuclear reactors may drive the further development of fourth-generation nuclear power. The following is a summary of the research report: AI technology has led to an increase in energy demand in data centers, and Google plans to purchase SMR to provide power support. In the context of the rapid development of AI technology, the energy demand for data centers has become the focus of global attention.

Two days after Google announced a power purchase agreement with an advanced nuclear reactor supplier, Amazon also announced three new agreements. Each agreement involves supporting the development of small modular nuclear reactors (SMRs), which are only one-tenth to one-quarter the size of conventional nuclear power plants. If these projects are successfully completed, SMR will become a zero-carbon source of energy for large technology companies trying to save climate goals by switching to nuclear energy.

UBS upgraded cloud security company Datadog's rating from “neutral” to “buy,” and the target price was raised by $25 to $150. According to UBS, industry surveys show that Amazon's AWS and Microsoft's Azure cloud infrastructure division's spending may improve in the second half of the year, and there may be strong growth in the medium term. These trends may help Datadog maintain or even moderately accelerate its growth rate of about 20% in the next few quarters.

Meta Platforms recently announced that it will release a series of new artificial intelligence models, including a model capable of self-evaluation, which may reduce human participation in the AI development process.

The publication comes after Meta's August paper introducing the tool, which detailed how the tool uses the same “chain of thought” technology as OpenAI's O1 model to improve the accuracy of answers to challenging questions in science, coding, and mathematics. Meta researchers use data generated entirely by artificial intelligence to train evaluation models, eliminating the need for manual input.

Spirit Airlines shares surged, and the company said it had reached an agreement with the US Bank National Association (US Bank National Association) to further extend the 2025 note deadline to December 23, thereby freeing up more time to refinance the 2025 debt.

Barclays downgraded the Joint Package rating.

Elsewhere, the price of West Texas Intermediate Crude Oil (WTI) futures for November delivery on the New York Mercantile Exchange rose $1.34, or more than 1.93%, to close at $70.56 a barrel.