The blockbuster data is good for the expectation of interest rate cuts, but the Nasdaq has dived! What's going on? The "seven sisters" of U.S. stocks fell together, and Tesla's market value evaporated by 514.6 billion yuan overnight

National Business Daily

2024-07-12 07:22Published on the official account of Sichuan Daily Economic News

Edited by: Du Yu

On July 11, local time, the three major U.S. stock indexes closed differentially, and as of the close, the Dow rose 0.08%; The Nasdaq fell more than 360 points, or 1.95%; The S&P 500 fell 0.88%.

After the release of United States CPI data, the "seven sisters" of US stocks plummeted across the board, with Nvidia falling more than 5%, Meta falling more than 4%, and Apple, Microsoft, Google, and Amazon falling more than 2%. Semiconductors, computer hardware, and consumer electronics were among the top decliners, with Arm falling more than 7%, Qualcomm and Micron Technology falling more than 4%, Dell Technologies and ASML falling more than 3%, and Snap falling more than 2%. The real estate and construction and leasing services sectors rose, Hertz Car Rental rose more than 12%, United States real estate investment rose more than 9%, Hekla Mining rose more than 7%, Aviation Leasing Company, Costa rose more than 4%, CRH cement and United Leasing rose more than 3%.

Tesla reported $241.03, down 8.44%, ending an 11-game winning streak, and its market value evaporated by $70.9 billion (about 514.6 billion yuan) overnight.

According to the Securities Times, according to people familiar with the matter, Tesla has postponed the release of the robotaxi robotaxis from August to October in order to give the project team more time to build more car prototypes.

It is understood that in recent months, Musk has prioritized the development of RoboTaxi over the cheaper electric car project, which was previously expected to be cheaper than the company's current cheapest model, the Model 3. According to sources, Tesla has canceled the development of cheaper electric vehicles, while RoboTaxi, which is based on the same small car platform, will continue to be developed.

On April 5 this year, Musk posted on social media X that the company would launch a robo-taxi on August 8. He also said on Tesla's first-quarter earnings call that it would launch "new models" through existing platforms and production lines in early 2025. After Tesla's first-quarter earnings call, Musk reiterated his vision for Tesla, which is to work on developing robotaxis that can make money for car owners, as well as a driverless transportation network.

Popular Chinese concept stocks rose, and the Nasdaq China Golden Dragon Index rose 2.24%. Xpeng Motors rose more than 7%, JD.com, Vipshop rose more than 6%, iQiyi rose more than 4%, Bilibili, Li Auto, Weibo, Alibaba rose more than 3%, Baidu, Manbang rose more than 2%, NetEase, Weilai rose more than 1%, and Pinduoduo rose slightly. Futu Holdings and Tencent Music fell slightly.

Gold and silver performed strongly.

United States CPI data released Biden: Significant progress has been made in the fight against inflation

On July 11, the latest consumer price index released by the United States Department of Labor showed that core CPI, which excludes food and energy costs, rose 0.1% month-on-month in May, the smallest increase since August 2021. The year-on-year increase of 3.3% was also the lowest level in more than three years.

The market expects the Fed to cut interest rates for the first time this year closer and closer. According to the Chicago Mercantile Exchange's "Fed Watch" data, the probability that the Fed will keep interest rates unchanged in August is 95.3%, and the probability of cutting interest rates by 25 basis points is 4.7%. There is a 28.6% probability that the Fed will keep interest rates unchanged until September, a 68.1% probability of a cumulative 25 basis point rate cut, and a 3.3% probability of a cumulative 50 basis point rate cut.

According to Securities Times, United States President Joe Biden said that the CPI report showed significant progress in the fight against inflation, with overall prices falling last month after flattening in May, with core inflation at its lowest level in more than three years.

With the expectation of interest rate cuts, why did the Nasdaq index take a big dive?

According to China Fund News, market analysts have analyzed that the funds that have been hiding in technology stocks are actually safe-haven funds, and the most popular strategy in the first half of this year's U.S. stocks is that every time inflation exceeds expectations, market funds will "hide" in large companies such as technology stocks, and tend to invest in large technology companies like Nvidia, while reducing small-cap stocks. Because the fundamentals of big tech companies are AI-driven, they have a low correlation with inflation and the economy, and they have ample cash flow. But once inflation slows, then market money starts to turn to the rate-cutting trade, selling tech stocks and buying small-cap stocks.

The person further analyzed that the Nasdaq index is likely to outperform small-cap stocks and biotechnology for a period of time.

As of the close, U.S. small-cap stocks represented the Russell 2000 Index ETF, up more than 3%.

Fed officials "liked" the CPI report: said that policy may be adjusted

On July 11, local time, San Francisco Fed President Mary · Daly said that in light of the latest employment and inflation data, some adjustments to interest rates may be reasonable.

"It's clear that the risks to our stated twin goals of price stability and full employment have been better balanced and monetary policy is working," Daley told the media on the call. ”

"Based on the information we've received so far, including data on employment, inflation, GDP growth, economic outlook, etc., I think there is a need for some (monetary) policy adjustments," she added. ”

The employment situation report released last week showed that the unemployment rate in United States unexpectedly rose to 4.1% in June, the highest since November 2021. Daly expects further easing in prices and labor markets, paving the way for the Fed's first rate cut.

"When restrictions are eased has become our new focus, that's a pretty clear signal, and now you're hearing a lot of us, especially Chairman Powell, talk about the importance of the labor market, not just the need to bring down inflation," Daly said. ”

Daly acknowledged that the future inflation process may be "bumpy", but it will cool further. She also mentioned that the United States economy appears to be heading for "one or two rate cuts this year," as policymakers predicted in June ("dot plot"), and "that would be the appropriate path."

Daly noted that since the beginning of the year, the likelihood of a re-acceleration in inflation has diminished, but the Fed is unlikely to cut rates as quickly as it will raise interest rates because of the difficulty of getting rid of high prices.

Gregory Faranello, head of United States rates trading and strategy at AmeriVet Securities, said the United States economy has weakened and inflation is falling. This is a good situation for the Fed, which expects more friendly employment and inflation data in the coming months, which will lead to the Fed starting to cut rates, albeit slowly and cautiously.

Lindsay Rosner, head of multi-department investments at Goldman Sachs Asset Management, said that between today and the September Fed meeting, there are three more inflation data releases, and today's data will be crucial to help the Fed gain confidence that inflation is still moving in the right direction. The heat wave of economic data appears to have subsided, followed by cooler inflation data after last week's cooling of labor market data, signaling that the Fed will cut interest rates in September.

Daily Economic News, Comprehensive Securities Times, China Fund News, Every Economic News, Public Information

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