This week, the European and American stock markets experienced a huge shock, with the German DAX index and the European STOXX50 index both fluctuating by over 3%. The Nasdaq index fell more than 360 points, down over 2%, with an amplitude of over 6%; The Dow Jones Industrial Average rose 0.75%, with a volatility of over 2%; The S&P 500 index fell 0.83%, with an amplitude of over 3%.
US tech stocks plummeted, with Nvidia falling more than 4% and amplitude exceeding 15%, Apple, Microsoft, and Meta all falling more than 2%, Google-A falling 6%, Tesla falling more than 8%, and Amazon falling 0.34%. The stock prices of the "Seven sisters" all fluctuated sharply this week, and their market value evaporated by 533.3 billion US dollars (3.87 trillion yuan).
On July 26th local time, the US Securities and Exchange Commission (SEC) and the Department of Justice jointly announced a lawsuit against Andrew Lefort and his venture capital firm, Citron Capital.
"Seven sisters" lost nearly 4 trillion yuan in market value
This week, most major European stock indices have risen. Among them, the FTSE 100 index in the UK rose by 1.59%, the DAX index in Germany rose by 1.35%, the STOXX50 index in Europe rose by 0.73%, and the CAC40 index in France fell by 0.22%. Multiple stock indices have experienced severe fluctuations, with Germany's DAX index and Europe's STOXX50 index fluctuating by over 3%, and France's CAC40 index fluctuating by over 4%.
This week, the three major indexes of the US stock market experienced a huge shock. The Dow Jones Industrial Average rose 0.75%, with a range of 2.35%, while the Nasdaq and S&P 500 indices fell 2.08% and 0.83%, with ranges of 6.17% and 3.53%, respectively. The Nasdaq index fell more than 360 points.
The rise and fall of important stock indices in Europe and America this week
The main reason for the sharp decline and shock of the Nasdaq index this week is the decline and shock of heavyweight stocks.
As of the close of the latest trading day, only PepsiCo among the top 15 stocks by market capitalization on NASDAQ rose 2.00% this week, while all other stocks fell. Apple, Microsoft, Nvidia, Google-A, Amazon, Meta and Tesla, the "Seven sisters of the US Stock Market", fell 2.83%, 2.71%, 4.13%, 6.00%, 0.34%, 2.33% and 8.11% respectively this week, with the amplitude of 5.87%, 7.12%, 15.59%, 11.00%, 6.87%, 11.03% and 17.16%, respectively. The market value evaporated separately by US $97.371 billion, US $87.999 billion, US $119.802 billion, US $131.504 billion, US $6.556 billion, US $28.130 billion and US $61.976 billion. The total market value evaporated exceeded US $533.3 billion (equivalent to RMB387 trillion). In addition, ASML and AMD both had amplitudes exceeding 10% this week.
Nvidia disclosed that its director HUANG JEN HSUN reduced his holdings of 120000 shares in the company on July 25th. In the past three months, a total of 21 important shareholders have reduced their holdings of 9.5808 million shares in the company.
What are the reasons for the huge impact and sharp decline in technology stocks on the week? The market is beginning to believe that the AI narrative driving technology stocks to soar comes with high costs and investments, and has been ongoing for nearly two years, but it seems that a path has not yet been found to achieve returns that match the investments. Goldman Sachs stated that tech giants have made significant investments in AI infrastructure, including investments in data centers, chips, and other artificial intelligence infrastructure, as well as power grids. However, so far, these investments have hardly shown significant results.
David Cahn, a partner at Sequoia Capital, also stated that the technology industry needs to generate approximately $600 billion in annual revenue to offset all current investments in AI, but this number is far from being reached.
Morgan Stanley stated that the computer driven macro hedge fund strategy sold $20 billion worth of stocks on Wednesday and expects to sell at least $25 billion in the coming week, making it one of the largest risk liquidation events in a decade.
For the US stock market, Citigroup stated that the market is shifting its focus from politics to economic fundamentals. It is worrying that a series of recently released data are triggering market panic about an economic recession, which may put the US stock market at risk of a pullback in the second half of the year. As recession fears spread, there may be a 5% pullback in the US stock market in the second half of the year.
SEC accuses "well-known bear" Citron Capital and its founder
On July 26th local time, the US Securities and Exchange Commission (SEC) and the Department of Justice jointly announced a lawsuit against Andrew Left and his venture capital firm Citron Capital, accusing them of allegedly profiting up to $20 million by posting misleading information on social media platforms.
Source: SEC official website
The Department of Justice stated that Lefort is charged with one count of participating in a securities fraud scheme, 17 counts of securities fraud, and one count of making false statements to federal investigators. According to the statement, if Lefort is convicted on all charges, he may face up to 370 years in prison.
The SEC has filed an independent lawsuit against Lefort, accusing him and Citron Capital of violating the anti fraud provisions of federal securities laws. If found guilty, the SEC will require Lefort to return all funds allegedly obtained illegally and pay additional, unspecified fines.
The SEC stated that Leford is suspected of using posts on its company and social media platforms to publicly advise investors to short or long 23 companies (including Roku, Meta, and Nvidia) at least 26 times. Then, after the stock prices of these companies rose, Leford quickly changed its stance and engaged in reverse operations, thus illegally profiting.
In addition, the Department of Justice also accused Lefort of making false statements to the public and law enforcement agencies regarding his relationship with a hedge fund, and forging relevant documents.
Lefort's lawyer has not yet commented on this matter. The investigation by the SEC and the Department of Justice is still ongoing to determine if there are any further illegal activities.
Lefort is a well-known financial tycoon and one of the two most famous bears on Wall Street. He has worked as a securities analyst, trader, and commentator for CNBC, Fox Business, and Bloomberg Television. Citron Capital, founded by it, is a short selling institution with over 20 years of history. It is known for its aggressive short selling and has released more than 150 negative reports against listed companies.
