The risks of U.S. debt and deficit are on the rise, while a strong economy has diminished expectations for Federal Reserve rate cuts. The yield on the 10-year U.S. Treasury note surged to 4.26%, and the U.S. Dollar Index also approached 104.6, both soaring to three-month highs, putting pressure on European and American stocks, commodities, cryptocurrencies, and non-U.S. currencies.
Despite the slight dovish tone in the Fed's economic conditions "Beige Book" during the session, which showed that the U.S. economy continues to slow down and inflation remains moderate, causing a slight rebound in U.S. stocks, it was not enough to save the downtrend in U.S. stocks, with the Nasdaq Composite Index falling by more than 2% at one point.
Bank of England Governor Bailey indicated that due to faster-than-expected inflation decline, the Bank of England may cut rates again in November, and there may be another rate cut in December. If inflation continues to improve, the rate cut will be "more aggressive." The Bank of Canada, as expected, significantly cut rates by 50 basis points, and European Central Bank policymakers are divided on whether to make a substantial rate cut in December, with President Lagarde calling for caution.
On Wednesday, October 23rd, influenced by the weak stock prices of Apple and Nvidia, investors sold off technology, chip, and AI concept stocks, dragging the Nasdaq Composite Index down by nearly 2.3% at one point, leading the decline, while the Dow Jones Industrial Average and the S&P 500 both fell by about 1% for three consecutive days, with the Dow Jones falling 400 points, marking the largest drop since early September. Most sectors declined, with the discretionary consumer and technology sectors leading the way. Only the real estate and utilities sectors, which have "safe-haven attributes," rose. McDonald's fell 5.12% due to a severe E. coli infection incident, dragging the Dow Jones down nearly 632 points at one point in the session, and the China concept index also fell back, with New Oriental closing down 8.42%:
All three major U.S. stock indexes fell. The S&P 500 Index closed down 53.78 points, a decrease of 0.92%, at 5797.42 points. The Dow Jones Industrial Average, closely related to the economic cycle, closed down 409.94 points, a decrease of 0.96%, at 42514.95 points. The technology-heavy Nasdaq Composite Index closed down 296.48 points, a decrease of 1.60%, at 18276.65 points. The Nasdaq 100 Index closed down 1.55%. The Nasdaq Technology Market Value Weighted Index (NDXTMC), which measures the performance of technology stocks in the Nasdaq 100, closed down 1.89%. The Russell 2000 small-cap index, which is more sensitive to the economic cycle, closed down 0.79%. The VIX volatility index closed up 5.71%, at 19.24.
U.S. stocks fell across the board, with the Nasdaq Composite Index experiencing the largest drop.
Most U.S. industry ETFs closed lower. The utilities ETF rose nearly 1%, and the global airline industry ETF rose less than 0.5%. Meanwhile, the discretionary consumer ETF, the internet stock index ETF, and the global technology stock ETF all fell by more than 1.5%, with the technology industry ETF, the biotechnology index ETF, and the semiconductor ETF each falling by at least 1%, and the energy industry ETF and the healthcare industry ETF each falling by about 0.5%.
The S&P 500 Index's 11 sectors saw more declines than gains. The discretionary consumer sector fell 1.82%, the information technology/technology sector fell 1.68%, the telecommunications sector fell 1.37%, the energy sector fell 0.48%, the healthcare sector fell 0.46%, the materials sector fell 0.35%, the industrial sector fell 0.30%, the consumer staples sector fell 0.12%, the financial sector fell 0.12%, the utilities sector rose 1.01%, and the real estate sector rose 1.02%.
The "technology seven sisters" all declined. Tesla closed down 1.98%, with third-quarter EPS increasing by 9% instead of decreasing, and the Cybertruck's gross margin turned positive for the first time. After hours, the stock price once rose by more than 10%. Musk stated that the Cybercab will start mass production in 2026, with a target of producing 2 million units per year. He reiterated the expectation of delivering more affordable vehicles in the first half of 2025 and predicted a 20%-30% increase in vehicle deliveries in 2025. Musk also called on the U.S. federal government to approve the use of autonomous vehicles on the road. Apple fell more than 3.4% before closing down 2.16%. Reports indicated that the company has significantly reduced the production of Vision Pro headsets. Apple analyst Ming-Chi Kuo said that iPhone 16 orders have decreased by about 10 million units over three quarters. Next week, Apple will release the first AI features and Mac computers equipped with the M4 chip. Nvidia closed down 2.81%, Amazon closed down 2.63%, Google A closed down 1.43%, "Metaverse" Meta closed down 3.15%, and Microsoft closed down 0.68%.All seven tech giants fell, marking the first time since September 6th.
Most chip stocks declined. The Philadelphia Semiconductor Index closed down 1.14% at 5,131.37 points after falling 2.5%, with the industry ETF SOXX closing down 0.89%; Nvidia's double long ETF closed down 5.61%. AMD closed down 0.77%, Intel closed down 1.88%, Broadcom closed down 3.27%, Micron Technology closed down 2.57%, Applied Materials closed down 0.16%, KLA closed down 0.81%, Qualcomm closed down 3.8%, Arm Holdings closed down 6.67%, Qualcomm, which was threatened by Arm to withdraw chip design licenses, once fell more than 5%, Arm once fell 7.8%. ASML ADR closed down 1.7%, while TSMC ADR rose 1.2%, and ON Semiconductor rose 2.15%.
AI concept stocks fell collectively. BullFrog AI closed down 1.77%, SoundHound AI, an AI voice company held by Nvidia, closed down 5.5%, BigBear.ai closed down 6.43%, C3.ai closed down 3.17%, CrowdStrike closed down 2.99%, Dell Technologies closed down 0.76%, Snowflake closed down 1.64%, Super Micro Computer closed down 1.33%, Serve Robotics closed down 6.51%, Oracle closed down 1.26%, Palantir closed down 0.82%.
Most Chinese concept stocks turned down during the trading day. The NASDAQ Golden Dragon China Index closed down 1.2%. Among ETFs, the China Technology Index ETF (CQQQ) closed down 1.85%, the China Internet Index ETF (KWEB) closed down 1.38%, the FTSE China 3x Long ETF (YINN) closed down 0.98%, and the FTSE China 3x Short ETF (YANG) rose 0.85%. The "China Dragon" ETF RONDHL CHINA ETF (DRAG) closed down 0.45%. The FTSE A50 futures continuous night session closed down 0.68%, reporting 13,565.000 points.
Among popular Chinese concept stocks, New Oriental closed down 8.42%, Fangdd closed down 8%, Tiger Brokers closed down 6.2%, Pinduoduo closed down 4.8%, Alibaba closed down 2.45%, Baidu closed down 2.21%, NetEase closed down 1.22%, JD.com closed down 0.87%, Ji氪 closed down 4.65%, NIO closed down 0.76%, Bilibili closed down 0.49%, Tencent Holdings ADR closed down 0.24%, while VIPShop closed up 0.93%, Ctrip.com closed up 1.5%, Mengniu Dairy ADR closed up 0.19%, XPeng Motors closed up 1.09%, Li Auto closed up 3.76%, Meituan ADR closed up 2.54%, and Miniso closed up 2.27%.
Other key stocks: (1) McDonald's, which caused serious E. coli infection incidents in many places in the United States, closed down 5.12%, leading the Dow Jones component stocks, once fell 7.6%. (2) Lam Research's first fiscal quarter adjusted EPS, revenue, and performance guidance were all higher than expected, and it once rose more than 5.7% after the market closed. (3) IBM's third-quarter revenue of $14.97 billion did not meet analysts' expectations, and it once fell more than 7.6% after the market closed. (4) Most solar energy concept stocks fell, with SolarEdge closing down 14.99%, and photovoltaic inverter supplier Enphase Energy closing down 14.92%. (5) Coca-Cola, which reported good third-quarter results, fell 2%, Boeing, which suffered a huge loss of $6 billion in the third quarter, fell 1.8%, Kering Group's U.S. stocks fell nearly 3%, warning that annual profits may be the lowest since 2016, and Spirit Airlines, which resumed merger negotiations with Frontier, rose nearly 47%. (6) Uber once fell more than 2.6% after the market closed, Lyft also fell more than 0.7%, and Musk talked about the prospects of launching ride-hailing services in Texas and California.
European national stock indexes and most sectors fell:
The European STOXX 600 Index closed down 0.30%, reporting 518.84 points. The Eurozone STOXX 50 Index closed down 0.34%, and the FTSE Eurofirst 300 Index closed down 0.21%. Most sectors fell, with a large number of companies reporting earnings on Wednesday, and Deutsche Bank's Q3 profit recovery exceeded expectations.
The German DAX 30 Index closed down 0.23%, the French CAC 40 Index closed down 0.50%, the Dutch AEX Index closed down 0.82%, the Italian FTSE MIB Index closed down 0.10%, and the British FTSE 100 Index closed down 0.58%.
European and American bonds fell together, with U.S. Treasury yields rising across the board. The 10-year U.S. Treasury yield once rose above 4.26%, reaching a three-month high, British bond yields generally rose by more than 2 basis points, and the two-year German bond yield rose by more than 7 basis points.U.S. Treasury Bonds: At the end of the day, the yield on the 10-year U.S. benchmark Treasury note rose by 3.80 basis points to 4.2456%. The yield on the two-year U.S. Treasury note increased by 4.55 basis points to 4.0779%, trading at a two-month high.
European Debt: At the close, the yield on the 10-year German bund fell by 1.4 basis points to 2.304%, having touched a daily high of 2.331% at 22:26 Beijing time. The yield on the 10-year U.K. gilt rose by 3.4 basis points to 4.200%, while the two-year yield increased by 2.3 basis points.
In terms of investment research strategy, Goldman Sachs believes that European debt is more attractive than U.S. debt, especially the 10-year German bund. Vanguard analysts stated that due to the strong resilience shown by the U.S. labor market and consumers, the Federal Reserve is unlikely to cut interest rates quickly. Meanwhile, the European Central Bank may further cut interest rates amid slowing economic growth. We are positioning for underperformance in U.S. Treasury bonds and outperformance in European government bonds.
U.S. Treasury yields rose across the board again, with the 10-year benchmark bond yield reaching a three-month high.
The U.S. Dollar Index (DXY) rose by more than 0.3% to near a three-month high, with the Japanese yen falling by more than 1% and breaking below 153 for the first time in three months. The offshore renminbi once again broke through 7.14 yuan before recovering its losses. Bitcoin fell by more than 1% and dropped below $67,000.
U.S. Dollar: The U.S. Dollar Index (DXY) rose by 0.32% at the close, reporting 104.407 points, with intraday trading ranging from 104.090 to 104.570 points. The Bloomberg Dollar Index increased by 0.20%, reporting 1260.39 points, with intraday trading ranging from 1257.41 to 1263.41 points.
The U.S. dollar rose to its highest level since early July.
Non-U.S. currencies: The euro fell by 0.14% against the U.S. dollar, reporting 1.0784; the pound fell by 0.45% against the U.S. dollar; the U.S. dollar rose by 0.11% against the Swiss franc; among commodity currency pairs, the Australian dollar fell by 0.68% against the U.S. dollar, the New Zealand dollar fell by 0.61% against the U.S. dollar, and the U.S. dollar rose by 0.12% against the Canadian dollar. The Swedish krona rose by 0.42% against the U.S. dollar, and the Norwegian krone rose by 0.66% against the U.S. dollar.
Japanese Yen: The yen fell by 1.07% against the U.S. dollar at the close, reporting 152.69, with intraday trading ranging from 151.03 to 153.19 yen. The euro rose by 0.93% against the yen, reporting 164.66 yen; the pound rose by 0.69% against the yen, reporting 197.367 yen.
Bank of Japan Governor Haruhiko Kuroda stated that the Bank of Japan will continue to implement a relatively accommodative monetary policy. The Bank of Japan hopes to raise inflation expectations to a new level, and the tight labor market in Japan has a positive impact on wage growth.Offshore Renminbi (CNH): The offshore renminbi against the US dollar fell by 1 point at the close, trading at 7.1358 yuan, with overall trading ranging from 7.1335 to 7.1467 yuan.
Cryptocurrencies: The largest market cap leader, Bitcoin, fell by 1.29% at the close, trading at $66,620.00. The second-largest, Ethereum, fell by 4.78%, trading at $2,511.00.
Most cryptocurrencies declined, with Bitcoin retreating to $66,000.
The US dollar rose to its highest since the end of July, and the US EIA crude oil inventory increase exceeded expectations, putting pressure on oil prices, with US oil falling by more than 1.3% to end two days of consecutive gains. Investors are still closely monitoring the situation in the Middle East, with US oil still up by more than 2.2% for the week:
US Oil: WTI December crude oil futures closed down $0.97, a decrease of 1.35%, at $70.77 per barrel. US oil maintained a downward trend throughout the day, with the lowest drop of more than 2.2% during European stock trading, approaching $70.
Brent Oil: Brent December crude oil futures closed down $1.08, a decrease of 1.42%, at $74.96 per barrel. Brent oil maintained a downward trend throughout the day, with the lowest drop of more than 2.1% during European stock trading, approaching $74.40.
In terms of news, the US EIA crude oil inventory increased by 5.474 million barrels last week, with analysts expecting an increase of 728,670 barrels, following a decrease of 2.191 million barrels the previous week. According to CCTV News, sources say that Israel is considering a two-week ceasefire with Hamas. The Israeli Security Cabinet has discussed this proposal but has not yet approved it. It is currently unclear whether Hamas is willing to accept the ceasefire proposal. IG market strategist Yeap Jun Rong stated that the ceasefire agreement is expected to reach an impasse, and the Middle East conflict is likely to continue for a longer period.
Natural Gas: NYMEX November natural gas futures closed up 1.34%, at $2.3420 per million British thermal units.
After two days of strong gains, oil prices fell due to increased crude oil inventories, a stronger US dollar, and the absence of extreme news in the Middle East.
Supported by safe-haven demand triggered by the US election and tense situations in the Middle East, spot gold prices approached $2,760, setting a new historical high for five consecutive days. Subsequently, the rise in the US dollar and US Treasury yields put pressure on the precious metals rally, with spot gold closing down by 1.2%, barely holding the $2,700 mark, and spot silver once fell by 4%, bidding farewell to a twelve-year high.Gold: COMEX December gold futures closed down 1.09% at $2,729.70 per ounce, reaching an intraday high of $2,772.60, setting a new historical record, before quickly falling to a daily low of $2,722.10. During the European stock market session, spot gold rose by more than 0.3% to a historical high of $2,758.49, then sharply reversed, falling nearly 1.5% in the early US stock market, approaching $2,700, and closed down 1.21% at $2,715.82 per ounce.
Silver: COMEX December silver futures closed down 3.28%, at $33.890 per ounce. Spot silver maintained a downward trend throughout the day, falling nearly 4.1% in the early US stock market, approaching $33.40, and closed down 3.32%, at $33.6990 per ounce.
In terms of news, RJO Futures Senior Market Strategist Haberkorn stated that, considering some investors taking profits and the upward trend in US Treasury yields, the rise in gold prices is limited. However, due to safe-haven demand, gold prices may rise to $2,800 per ounce by the end of this weekend.
London industrial metals were mixed: LME copper closed down $62, with a drop of more than 0.64%, at $9,522 per ton. LME aluminum closed up $36, rising more than 1.36%, at $2,670 per ton. LME zinc closed up $6, at $3,144 per ton. LME lead closed down $6, at $2,063 per ton. LME nickel closed down $8, at $16,308 per ton. LME tin closed down $1, at $30,906 per ton. LME cobalt was unchanged, at $24,300 per ton.
COMEX copper futures fell 1.08%, at $4.3330 per pound.
Spot gold fell after reaching a new high
The following content was updated before 22:00 Beijing time on October 23rd
The US economy remains resilient, coupled with the risks of US debt and deficits, causing the benchmark 10-year US Treasury yield to rise by 3 basis points to 4.23%, reaching the highest level since July. The rise in interest rates put pressure on US stocks.
On Wednesday, US stocks and bonds fell together. The S&P fell for three consecutive days, with component stocks such as McDonald's and Starbucks falling, dragging the Dow down nearly 300 points at one point:U.S. stock indices fell across the board: The S&P 500 index once dropped by more than 0.5%. The Dow Jones Industrial Average, closely related to the economic cycle, once fell by nearly 0.7% or 299 points. The tech-heavy Nasdaq once fell by more than 2%. The Russell Small Cap Index once fell by more than 0.6%. The Nasdaq 100 once fell by more than 0.9%.
At the beginning of the U.S. stock market, most of the major industry ETFs fell, with the Consumer Discretionary ETF and Gold ETF leading the decline.
Most of the "Tech Seven Sisters" fell. Nvidia once fell by more than 3.7%, and Apple once fell by nearly 0.9%. It was reported that Apple's head-mounted display Vision Pro has been significantly reduced in production and may be completely discontinued before the end of the year. Amazon once fell by nearly 1.4%, Tesla once fell by nearly 1.2% after rising by more than 0.3% at the beginning of the market, Google A once fell by more than 0.7%, "Metaverse" Meta once fell by nearly 1.1%, and Microsoft once rose by more than 0.8%.
Chip stocks fell collectively. The Philadelphia Semiconductor Index once fell by more than 1%, and Nvidia's double long ETF once fell by more than 7%. Arm Holdings once fell by more than 6.4%, Qualcomm once fell by more than 3.2%, Micron Technology once fell by more than 2.7%, ASML ADR once fell by more than 2%, AMD once fell by nearly 1.9%, Broadcom once fell by nearly 1.7%, Intel once fell by more than 1.2%, and ON Semiconductor once rose by more than 4.7%.
AI concept stocks fluctuated. SoundHound AI, an AI voice company held by Nvidia, once fell by more than 4.9%, BigBear.ai once fell by more than 3.5%, C3.ai once fell by more than 2.6%, CrowdStrike once fell by more than 2.4%, Super Micro Computer once fell by more than 2%, while Oracle once rose by more than 0.4%, BullFrog AI once rose by more than 7.2%, and Serve Robotics once rose by more than 5.5%.
Chinese concept stocks fell slightly. The Nasdaq Golden Dragon China Index once fell by nearly 0.7% after rising by nearly 0.6% at the beginning of the market. Among popular Chinese concept stocks, New Oriental once fell by more than 8.5%, Tiger Brokers once fell by more than 8%, Baidu once fell by more than 1.9%, Alibaba once fell by more than 1.8%, Pinduoduo once fell by more than 2.3% at the beginning of the market and then cut the decline in half, while Li Auto once rose by nearly 6.8%, Miniso once rose by more than 5%, Meituan ADR once rose by nearly 6%, XPeng Motors once rose by more than 3.7%, Ctrip once rose by more than 2.1%, and JD once rose by more than 2%.
Among other key stocks: (1) Significant price increases offset the impact of weak demand, Coca-Cola's Q3 revenue exceeded expectations, and the full-year revenue guidance was raised, with the stock price falling by more than 4.1% and then cutting the decline in half. (2) Trump concept stocks rose, Phunware once rose by more than 25.4%, and Trump Media Technology Group once rose by more than 6.9%. (3) McDonald's fell by about 7%, the largest decline since March 2020, with severe E. coli infection incidents occurring in McDonald's in many parts of the United States, resulting in 10 hospitalizations and 1 death.