On June 25, 2024, Eastern Time, Nvidia's strong rebound and outstanding performance in technology stocks injected a new round of upward momentum into the US stock market; The Nasdaq index rose 1.26%, while the S&P 500 index rose 0.39%, both ending three consecutive days of decline. In terms of constituent stocks, Nvidia surged 6.76%, while TSMC, Google, Tesla, and Meta rose over 2%.
The violent rebound of technology giant Nvidia in this round once again confirms that the three-day consecutive pullback in the previous period was mainly due to fund adjustments, rather than reflecting a deterioration in the growth prospects of technology or AI. After ChatGPT was recognized by the market, the AI wave quickly swept the world. Internet giants spent tens of billions of dollars in the arms race of AI iteration in order to get a ticket to the AI era. The calculation behind the rapid AI iteration comes from the GPU of semiconductor giants. Looking ahead to the future, AI is expected to become the beginning of the fourth round of global technological revolution. With the commercialization of artificial intelligence and the shipment of important consumer electronics products in Q3, strong downstream demand may push semiconductor giants represented by Nvidia to exceed expectations in financial reports, and drive the US stock market to reach new highs in science and technology.
As for monetary policy, we will continue our previous view that although interest rate cuts may be delayed, they will arrive. For the current US stock market, what is important is not the specific timing of interest rate cuts, but rather the likelihood that interest rate cuts will begin within the year against the backdrop of declining inflation and a slowdown in the labor market. The market has gradually digested the expectation of only lowering interest rates once a year, and as long as the Federal Reserve does not restart the interest rate hike cycle, there will be no overreaction in the market. For markets like the US stock market, which has a long history of rising prices, the cost-effectiveness of timing is far from high compared to long-term holding. It is recommended that investors allocate assets along the direction of interest rate cuts.
Looking ahead to the future, Tianhong Fund believes that the US stock market is about to usher in another financial reporting season from July to August, and the stability of the main business of technology giants and the progress of AI will once again become the focus of market attention. In addition, the third quarter of 2024 is a crucial period for the US general election, and with the existence of the Federal Reserve's interest rate cut window, the US stock market will still be very exciting! Related products include Tianhong NASDAQ 100 Index (Class C: 018044) and Tianhong Global High end Manufacturing Hybrid (Class C: 016665). There are risks in the market, and investment should be cautious. The above stocks are only for objective display and not for individual stock recommendations.