A big rebound?
After experiencing Black Monday, may the global stock market experience a major rebound on Tuesday?
On Tuesday morning, the Nikkei 225 index futures hit a circuit breaker upwards. After the opening of the Japanese stock market, the Nikkei 225 index has continued to expand its gains, rising over 8% so far. The composite stock price index of the South Korean stock market opened up 3.76%, and the futures of the South Korean Growth Enterprise Market Index (KOSDAQ) surged, triggering the "SIDECAR" suspension mechanism and suspending programmatic trading buy orders for 5 minutes. At the beginning of trading, major stock index futures in the United States all saw gains, with Nasdaq 100 index futures rising by over 1%.
On Monday, despite the sharp decline in the Asia Pacific stock market, the European and American stock markets also came to a bleak end. In terms of the US stock market, the three major stock indexes collectively closed down. As of the close, the Dow Jones Industrial Average fell 2.60%, the Nasdaq fell 3.43%, and the S&P 500 index fell 3.00%. In terms of European stocks, major stock indices generally fell, with the German DAX30 index falling 1.82%, the UK FTSE 100 index falling 2.04%, the French CAC40 index falling 1.42%, and the European Stoxx 50 index falling 1.45%.
It is worth noting that during last night's US stock trading session, Chinese concept stocks performed relatively firm after opening significantly lower. According to Wind market data, the Nasdaq China Golden Dragon Index opened about 3% lower, rose and turned red during trading, and closed slightly up 0.25%. Among the popular Chinese concept stocks, New Oriental closed up 8.89%, Bilibili rose 3.16%, and Yum China rose 0.91%; Ideal Auto fell 1.77%, NetEase fell 2.29%, Baidu fell 2.49%, Xiaopeng Motors fell 3.17%, Jike fell 3.53%, and NIO fell 3.95%. After hours data from the US stock market shows that popular Chinese concept stocks have all risen, with Baidu, Pinduoduo, NIO and others rising by over 1%.
The Dow Jones Industrial Average fell over a thousand points on Monday, marking its largest daily decline in nearly two years
On Monday, August 5th local time, the three major US stock indexes collectively closed down. As of the close, the Dow Jones Industrial Average fell 1033.99 points, or 2.60%, to 38703.27 points; The Nasdaq fell 576.08 points, or 3.43%, to 16200.08 points; The S&P 500 index fell 160.23 points, or 3.00%, to 5186.33 points.
The S&P 500 index and Dow Jones Industrial Average both experienced their largest daily declines in nearly two years. The Nasdaq 100 index, which has a high proportion of technology stocks, has experienced significant declines for three consecutive trading days since August, marking its worst performance since 2008. The VIX index, Wall Street's "panic index," once recorded its largest increase since 1990. Nvidia fell 6.38%, as SEC documents show that Nvidia CEO Huang Renxun sold a total of 372000 Nvidia shares in 31 separate transactions between June 13 and August 1, cashing out over $470 million. Affected by market panic, Bitcoin plummeted by over 8% in a single day, with the latest price being $54700 per coin.
Among the 500 constituent stocks of the S&P 500 index, only 22 recorded gains, with the top gainers being Kellogg's (16.23%), Tyson Foods (2.09%), and recently oversold CrowdStrike (1.91%) and AMD (1.75%). The 30 constituent stocks of the Dow Jones Industrial Average were completely wiped out.
(S&P 500 index heat map. Source: finviz)
Morgan Stanley's Mislav Matejka said that the stock market will continue to be under pressure due to weakened business activity, declining bond yields, and deteriorating profit prospects. Morgan Stanley's Michael Wilson warns of "unfavorable" risk return.
This doesn't look like the 'recovery' background that people hope for, "Matika wrote." We are cautious about stocks and expect the 'bad is bad' phase to come, "he added.
Maxwell from UBS Investment Bank said, "Similar to what we saw in the small cap stock rotation a few weeks ago, the volatility is intensifying. The difference today is that from a macro and yield perspective, the rise in risk premium levels is supported by fundamentals
The employment data released last week fell short of expectations, leading to increasing discussions about the US economic recession. The Federal Reserve's Daley expressed greater confidence that inflation is on a sustainable downward path; Obviously, inflation is decreasing and the job market is slowing down.
Other market aspects. Most US Treasury yields closed higher, with 2-year yields up 5.1 basis points to 3.941%, 3-year yields up 4.4 basis points to 3.758%, 5-year yields up 3.5 basis points to 3.658%, 10-year yields up 0.9 basis points to 3.804%, and 30-year yields down 2.6 basis points to 4.083%.
International precious metal futures generally closed lower, with COMEX gold futures falling 0.72% to $2452.1 per ounce and COMEX silver futures falling 3.63% to $27.36 per ounce.
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In terms of sectors, the 11 major sectors of the S&P 500 index collectively closed down. Among them, the information technology sector led the decline with a 3.78% drop, while the communication services and non essential consumption sectors fell by 3.36% and 3.07% respectively.
Popular technology stocks have generally fallen. Intel and Nvidia fell more than 6%, Apple, Google A, Tesla, Cisco, and Amazon fell more than 4%, Eli Lilly, Texas Instruments, and Microsoft fell more than 3%, Arm, Meta, AMD, Micron Technology, and Netflix fell more than 2%, TSMC and Broadcom fell more than 1%, Qualcomm fell slightly, and ASML and AMD Semiconductor rose more than 1%.
Google A fell 4.45%. Federal Judge Amit Mehta ruled on Monday that Google illegally monopolized the search engine market, marking the government's first victory in a major tech company antitrust case in over 20 years. The judge stated that the $26 billion paid by Google to companies such as Apple made its search engine the default option for smartphones and web browsers, effectively preventing other competitors from succeeding in the market. These distribution agreements have blocked most of the general search service market and harmed opportunities for competitors. Monopolizing distribution channels enables Google to continuously increase online advertising prices without restrictions.
The government agency stated that Google has paid billions of dollars to Apple, Samsung Electronics, and other companies for decades to make it the default search engine for smartphones and web browsers. This has helped Google become the most commonly used search engine globally, generating over $300 billion in annual revenue, with the majority coming from search advertising. The US Department of Justice has not yet clearly stated what changes it will seek, but may require Google's search business to be separated from other products such as Android or Chrome, which has been the case since AT&T in 1984; The largest forced split of a US company since the T split.
Currently, Google plans to appeal the ruling, as stated in a statement released on X. We plan to file an appeal, "Google Global Affairs President Kent Walker said in a statement.
Nvidia fell 6.36%. According to the Financial Times, Nvidia and its main supplier TSMC's highly anticipated next-generation most powerful AI chips are facing production challenges and may delay this year's shipment plans. Insiders say that Nvidia's cutting-edge design utilizes TSMC's new manufacturing process, and some models of chips have encountered difficulties in preparing for large-scale production of the Blackwell series data center chips. Nvidia declined to comment on this, but reiterated that "Blackwell production is proceeding as planned" and will begin large-scale production in the second half of 2024. Nvidia added that the demand for existing Hopper chips remains "very strong".
In addition, SEC documents show that Nvidia CEO Huang Renxun sold a total of 372000 Nvidia shares in 31 separate transactions between June 13 and August 1, cashing out over $470 million.
Tesla fell 4.23%. Musk filed a new lawsuit against ChatGPT manufacturer OpenAI and its CEO Ultraman on Monday, claiming that the company prioritizes profits and commercial interests over the public interest. Musk's lawsuit requires the court to confirm the invalidity of OpenAI's AI model usage license with Microsoft, and claims that these language models exceed the scope of OpenAI's cooperation with Microsoft. This lawsuit was filed in the Northern District Court of California, and the latest lawsuit claims that once OpenAI's technology begins to change generative AI, Ultraman will "change his statement and then start cashing out".
Intel fell 6.38%. According to Reuters, Intel is receiving a second ASML new "high NA" EUV tool worth 35 million euros, as revealed by CEO Pat Kisinger in the earnings conference call minutes on August 1st. Intel began receiving the first of these large machines in December last year, which will take several months to install and are expected to support a new generation of more powerful computer chips. Kissinger stated that the second high NA tool will enter facilities in Oregon, USA, and stated that the company's technology investment shows good early indicators.
Financial stocks collectively closed down. Mizuho Financial fell over 5%, Mastercard fell over 4%, Morgan Stanley fell nearly 4%, Visa, Bank of America, First Capital Financial, and Citigroup fell over 3%, Travelers Insurance, American Express, American International Group, Bank of America, Goldman Sachs, Regional Finance, Wells Fargo, JPMorgan Chase, and Deutsche Bank fell over 2%, BlackRock fell over 1%, and UBS Group fell slightly.
BlackRock fell 1.80%. David Roger, a fund manager of BlackRock, said on Monday that the recent rise of US treasury bond bonds was excessive, because the economic resilience may prevent the Federal Reserve from cutting interest rates as sharply as the market expected. However, he believes that the Federal Reserve should have started cutting interest rates last month to gradually shift towards a loose monetary policy. As the weak manufacturing and employment data released last week triggered recession concerns, the yield of treasury bond bonds dropped sharply, making the valuation of treasury bond bonds no longer attractive. Nevertheless, BlackRock managers believe that the Federal Reserve should lower interest rates by 25 basis points at the end of last week's meeting. The market currently expects the Federal Reserve to start cutting interest rates at its next meeting in September. If the Federal Reserve cuts interest rates, he expects the economy to achieve a so-called 'soft landing', where inflation decreases without a significant economic slowdown.
Goldman Sachs fell 2.47%. Tony Pasqualillo, Global Head of Hedge Fund Business at Goldman Sachs, said that as the decline in the US stock market widens, investors should hedge their risk exposure even if they have high-quality assets. Tony Pasqualillo wrote in a report to clients, 'Sometimes I have to step on the gas, sometimes I have to step on the brake, and I tend to reduce my exposure.' He added that it's hard to imagine August being one of the months when investors should take on significant portfolio risks. On the other hand, corporate buybacks should be meaningful in August. I think the next month will be a balanced process with no significant deviations, "he wrote. If choosing between long on high-quality assets and hedging, or further reducing the core investment portfolio, Tony Pasqualillo tends towards the former. For me, this is a tricky decision because I tend to think it's a retreat in a still good environment, unlike the beginning of a more serious and persistent situation
Energy stocks generally closed lower. Apache Oil and BP fell more than 3%, US Energy fell nearly 3%, Chevron, Western Petroleum, Schlumberger, Duke Energy, Shell, Murphy Oil, and Petrobras fell more than 2%, ExxonMobil and ConocoPhillips fell more than 1%, and Marathon Oil and Empire Oil fell slightly.
