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Tech Stocks Plunge, US Chip Bill Fails? Dow Dives 630, Nasdaq Down 4%
01
The long holiday has come to an end, but the U.S. stock market greeted the reopening of the A-share market with a massive plunge!
Last night, all three major U.S. stock indices experienced significant declines.
The Dow Jones Industrial Average rose in the first two days of this week, but began to show slight declines on Wednesday and Thursday. However, on Friday, the index fell by 630 points, a decrease of 2.11%, and the Dow Jones Industrial Average has now returned to below 30,000 points.
In terms of the magnitude of the decline, the Nasdaq fell by 3.8% last night, a larger drop that has essentially erased all the gains made on Monday and Tuesday.
02
Looking back now, the rise on Monday and Tuesday was mainly due to the significant market sentiment release following the substantial declines since mid-September, leading to an oversold rebound. At the same time, investors were also placing bets, gambling that the Federal Reserve would slow down the pace of future interest rate hikes due to unsatisfactory economic data.
However, by Wednesday and Thursday, the oversold rebound came to an end.
Further, on Friday, better-than-expected employment data were released, shattering the illusion that the Federal Reserve would change its monetary policy. This led to a shift from buying and waiting to selling, resulting in a significant drop in the U.S. stock market.
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03Another factor that cannot be overlooked is OPEC's opposition to the Federal Reserve.
While the Federal Reserve is focused on controlling inflation, the premise is to reduce oil prices. However, the oil prices that had just started to decline have undergone significant changes due to OPEC's announcement of a daily production cut of 2 million barrels starting from November.
The WTI crude oil price had already fallen below $80 in late September, reaching a low of $76, but it has recently risen rapidly, returning to above $90. The Brent crude oil price has also stabilized above $95.
This is a major blow to U.S. inflation. It seems that even if the Federal Reserve wants to lower interest rates, there are no such objective conditions.
For this reason, several officials of the Federal Reserve have also repeatedly conveyed this message to the market: the Federal Reserve will not lower interest rates and will definitely bring inflation back to the 2% target.
This is nothing more than hoping to make the market understand that the Federal Reserve will not consider changing its primary policy goal due to fluctuations in the financial market. The Federal Reserve pursues price stability, not the stability of the financial market.
In yesterday's industry sectors, the technology sector led the decline with a drop of 4.14%, followed by the consumer discretionary sector with a drop of 3.5%. In addition, the declines in telecommunications, real estate, finance, and utilities were all close to 3%, while the energy sector had the smallest decline, with only a 0.7% drop.
In terms of individual stocks, technology stocks saw larger declines, with Apple down 3.7%, Microsoft down 5.1%, Amazon down 4.8%, Tesla down 6.3%, Meta down 4%, and Google down 2.6%.
The performance of Chinese concept stocks was also not good. Last night, the China Financial Index fell by 4.1%, reaching the 6,000-point threshold.In the new energy vehicle sector, there is an expected decline of 6.9% in the future, with Ideal Auto falling by 6.6% and Xiaopeng by 6.3%.
In addition, Alibaba's decline reached 3.6%, JD.com also fell by 3.4%, and Baidu declined by 1.8%.
05
Yesterday, AMD released its latest quarterly report, forecasting a sequential decline of 15% in revenue for the third quarter. The market expected operating revenue of $6.7 billion, but the currently forecasted quarterly operating revenue is only $5.6 billion, which is significantly lower than market expectations. AMD attributed the blame to the sluggish personal computer market.
The chip stocks, which had just started to recover, fell sharply last night, leading to a 6% decline in the semiconductor index. Among them, AMD plummeted by 13.9%, NVIDIA's drop exceeded 8%, and Intel's decline also reached 5.4%.
However, market analysis suggests that the poor performance of chip stocks during this period is closely related to the US chip act. This act is very likely to ultimately fail because dividing the global market is not conducive to the development of the US chip industry.
Now, the stock market has responded to this act with the continuous decline of the semiconductor index.
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