On Tuesday, June 18, 2024, Eastern Time, the three major stock indexes in the US stock market collectively closed higher, with the Nasdaq index up 0.03% and the S&P 500 index up 0.25%; The Nasdaq index has risen for 7 consecutive trading days. In terms of constituent stocks, Nvidia surged 3.51%, with a total market value of 3.335 trillion US dollars, surpassing Microsoft and Apple in one fell swoop, becoming the world's most valuable listed company; Qualcomm rose 2.19%, while TSMC and ASMC saw a slight increase.
In terms of monetary policy, several Federal Reserve officials have stated that the path of interest rate cuts will depend on data, and the Federal Reserve will remain open and adjust interest rates based on economic data. The latest data released yesterday showed that US retail sales in May increased by 0.1% month on month, with an expected increase of 0.3%; Core retail sales decreased by 0.1%, which is also lower than expected. This data indicates that the growth rate of total demand in the United States was moderate in the second quarter, and it is expected that total consumption will slow down in the coming quarters. A soft landing of the US economy is still a highly probable event, and the window for interest rate cuts within the year is still open. It should be emphasized that for the current US stock market, although the rate cut is delayed, the specific timing may not be important. As long as investors confirm that there will be a rate cut in the future rather than further rate hikes, the market will not be very anxious.
In terms of AI progress, the US stock market has ushered in a milestone event - Nvidia's market value has become the world's number one, surpassing Apple and Microsoft, reflecting the market's great interest in artificial intelligence technology and recognition of the financial liquidity of US stock technology giants. From the perspective of the industrial chain, Nvidia is located upstream of the AI industry, providing computing power to the industry and serving as the cornerstone of the entire artificial intelligence productivity; Downstream manufacturers represented by Apple, Microsoft, and Google utilize AI for processing and combine it with their software ecosystem to effectively implement AI in the daily lives and work of the people. The computing power and application ends are both indispensable and interdependent in the industry chain. Only when downstream application ends have demand can the story of upstream capital expenditure continue. With the gradual promotion of AI commercialization and the shipment of important electronic products in the third quarter, the AI industry chain is expected to achieve market resonance under continuous profit promotion.
As for the valuation issue of US stocks that investors are more concerned about, the rise of NASDAQ since the beginning of the year is actually mainly due to profit contribution rather than valuation. Moreover, the consistently higher than expected financial reports of technology giants are gradually digesting valuation levels, as can be seen from the forward-looking valuations of technology giants represented by Nvidia, which are less than 30 times higher. It can be seen that the AI technology wave has brought huge profit growth to US stock technology, but its valuation level is far lower than that of the foam period of Scinet 20 years ago, so investors need not be too anxious.
The US stock market has performed exceptionally well in recent years, frequently reaching historic highs. Looking ahead to the future, Tianhong Fund believes that as the market gradually digests the expectation of only lowering interest rates once a year, the US stock market will pay more attention to fundamentals and profits. We need to believe that AI is not short-term hype, but a core technology mainline in the medium to long term. Computing power investment has begun, commercial applications are flourishing, and competition among technology giants in the AI field has just begun. The US technology sector, represented by the NASDAQ 100 index, is expected to continue to perform well with the release of profits from technology giants.
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