The U.S. stock market continues to be volatile over the "25 or 50 basis point" rate cut.
On September 17, local time, the three major U.S. stock indexes closed mixed. The Dow and S&P 500 closed largely flat, with both indices updating record highs in early trade, as investors brace for the Federal Reserve's first interest rate cut in four and a half years.
CME Group's Fed Rate Watch tool shows that the market is pricing in a 65% chance of a 50 basis point rate cut at this meeting. In recent days, market expectations for the magnitude of interest rate cuts have been erratic, which has also led to significant volatility in asset prices. In the opinion of the institution, if the Fed cuts interest rates by a smaller 25 basis points, it could trigger market volatility in September.
The day before the Fed's decision, there was still no consensus on the expected magnitude of interest rate cuts this week, which is extremely rare under Powell's leadership. Nick Timiraos, a financial journalist known as the "New Fed News Agency", wrote that whether the Fed will cut interest rates by a larger 50 basis points or the traditional 25 basis points is still uncertain, and the suspense is left to the last minute.
The three major U.S. stock indexes were mixed
On September 17, local time, the three major U.S. stock indexes closed mixed, Wind data shows that as of the close, the Dow fell 0.04% to 41606.18 points, the S&P 500 index rose 0.03% to 5634.58 points, rising for the seventh consecutive day, and the Nasdaq rose 0.2% to 17628.06 points.
Technology stocks rose across the board, with Amazon and Netflix rising more than 1%, and Apple, Google, Meta, and Microsoft all rising slightly.
Most bank stocks rose, Morgan Stanley fell slightly, JPMorgan Chase and Goldman Sachs rose slightly, and Citigroup, Bank of United States and Wells Fargo all rose more than 1%.
Chip stocks were mixed, Intel rose more than 2%, Micron Technology and Qualcomm rose more than 1%, Chaowei Semiconductor and Broadcom fell slightly, and TSMC and Nvidia fell more than 1%.
International precious metals futures generally closed lower, with COMEX gold futures down 0.48% at $2596.4 an ounce and COMEX silver futures down 0.27% at $31.05 an ounce.
Popular Chinese concept stocks generally rose, with the Nasdaq China Golden Dragon Index up 1.83%, Dada Group up more than 21%, Bit Digital and GDS up more than 10%, Daqo New Energy and Century Internet up more than 9%, Futu Holdings, Canaan Technology, and iQiyi up more than 4%; In terms of decline, Structure Biotech fell nearly 4%.
China's new energy vehicle stocks rose collectively, Weilai rose slightly, Xpeng Motors rose more than 1%, and Li Auto rose more than 12%.
Nvidia fell more than 1%
On September 17, local time, Nvidia fell more than 1%.
Investment bank Wedbush said in an investor note that if the Federal Reserve cuts interest rates this week, a range of tech stocks could benefit, especially the hottest companies in the artificial intelligence space, such as Nvidia.
It is reported that BlackRock is preparing to launch a more than $30 billion AI investment fund with tech giant Microsoft to build data centers and energy projects to meet the growing demand brought about by AI. Chipmaker Nvidia will provide expertise, the people also said.
In addition, Intel rose 2.68%. Previously, the company announced that it had adjusted the layout of its chip foundry business and signed an agreement with Amazon Cloud to jointly develop an AI chip using the 18A chip manufacturing process.
The Federal Reserve will announce its latest interest rate decision
At 2 a.m. Beijing time on September 19, the Federal Reserve will announce its latest interest rate decision. The Fed is now widely expected to cut interest rates at this meeting, and the key question is whether it will cut by 25 basis points or 50 basis points.
David Kelly, chief global strategist at JPMorgan Asset Management, said the Fed's interest rate decision this week may not address a core question facing the market, which is how many rate cuts are expected for the rest of the year. When Fed officials last published their projections, they expected only 25 basis points of rate cuts in 2024. But even if the Fed's new forecast is adjusted to two rate cuts this year, it will still be well below traders' expectations.
John Stoltzfus, an analyst at Oppenheimer Asset Management, said: "We remain bullish on equities, and the rotation has eased market volatility several times since the S&P 500 bottomed out last year. The pullback so far this year has mostly looked like a correction for the S&P 500. ”
BNP Paribas analysts said in a report that the increased likelihood of a 50 basis point rate cut by the Fed this week could lead to a "bull market steepening" in the United States yield curve, meaning short-term Treasury yields are falling faster than long-term Treasury yields, a trend that could gain momentum.
Source: China Securities Journal
Editor: Xiaoya