Last Friday, the three major US stock indexes diverged, with the Dow consolidating its recent gains and Nvidia continuing to drag down the technology sector, putting pressure on the S&P 500 and Nasdaq.
Due to last Friday being the so-called "Three Witches Day", a large number of stock options, stock index options, and stock index futures expired simultaneously, which is considered one of the factors that intensified market volatility on that day.
This week, the Federal Reserve's most favored core PCE inflation indicator will be released. The year-on-year growth rate of core PCE in April fell to the lowest since April 2021, and consumer spending unexpectedly declined.
Federal Reserve officials have stated that while they are encouraged by other inflation data, including CPI, they need to continue seeing progress in inflation decline for several months before lowering interest rates. However, at the same time, another part of the Federal Reserve's dual task - the labor market - has yet to make progress.
Nvidia falls behind as the "world's largest market value"
Last Friday, the Dow Jones rose 0.04% and the daily average rose for four consecutive days; The S&P 500 fell 0.16%; The Nasdaq fell 0.18%. Large technology stocks saw mixed gains and losses, with Google, Amazon, and Netflix rising over 1%, and Microsoft rising nearly 1%. Among them, Microsoft and Google's stock prices hit new closing highs. Broadcom fell more than 4%, while NVIDIA and Micron Technology fell more than 3%.
Nvidia fell nearly 5% at one point after the US stock market opened. As of last Friday's close, Nvidia fell 3.22% to close at $126.57 per share, with a market value of $3.11 trillion. Compared to the peak market value of $3.34 trillion on June 18th local time, after two days of decline on June 20th and June 21st, Nvidia's market value has evaporated by over $220 billion.
Nvidia quickly fell after only being the world's largest market capitalization on June 18th local time. On June 21st, the weekly chart ended with eight consecutive gains, with a total market value of $3.11 trillion, falling below Microsoft and Apple.
It is worth noting that NVIDIA CEO Huang Renxun has reduced his holdings of 600000 shares in the company and cashed out over 79 million US dollars within 5 trading days since June 13th.
Technology stocks facing selling pressure?
Will technology stocks led by Nvidia pause their "frenzy"?
Huatai Securities believes that the essence of the differentiation of the US stock market is "Only AI". Apart from the strong rise of technology stocks, other industries are generally weak. Although the overall sentiment of the US stock market has not overheated, NASDAQ has shown "overbought", and positions in the technology industry have become crowded again, which is often a signal of temporary adjustment pressure in the market.
"The overnight sell-off of US technology stocks is having an impact on the market," said Chamath de Silva, Senior Fund Manager at BetaShares Holdings in Sydney.
"The significant rise in Nvidia's stock price... may make it vulnerable to profit taking in the short term. However, any volatility can be short-lived," wrote Vivek Arya, an analyst at BofA Securities, in a research report.
Guojin Securities stated that Nvidia has compressed its product iteration cycle to one generation per year, maximizing the release of its current technological limits. So, continue to be optimistic about Nvidia's competitive advantage in the AI field.
US stock market volatility will increase
On a macro level, the major economic data released by the United States last week was mixed. As an important indicator of consumer spending, retail sales in the United States only increased by 0.1% in May, and the data in April was revised down to negative; As an important forward-looking indicator, the leading economic index of the Chamber of Commerce in May fell to 101.2, marking the third consecutive month of decline; However, a significant rebound in the S&P Global Purchasing Managers Index (PMI) in June may suggest a rebound in business activity at the end of the second quarter.
Huatai Securities stated that there is seasonal support for the US stock market in July, but it is expected that the volatility will increase, and attention will be paid to important variables such as the July FOMC meeting, financial reporting season, and US elections. It is not recommended to chase higher in terms of operation. Instead, it is advisable to consider a small profit stop or purchase put options for short-term downside protection. The performance of domestic economic data is relatively "stable". The effect of real estate policies and the disturbance of export expectations are the focus. The bond market focuses on the key points of 30y treasury bond. The stock market is still dominated by stock game, high cut low+overseas mapping, and focuses on the technology sector with less resistance.
Everbright Securities believes that in terms of rhythm, the US economy has strong resilience under a broad fiscal policy, supporting further upward growth in the US stock market in the second quarter. However, considering the tightening of liquidity in a high interest rate environment and election disturbances, the US stock market may be under pressure in the third quarter, and it is likely that the US stock market will close higher after the election. In terms of sectors, considering the weakening effect of fiscal tax cuts this year and the pressure on household income, consumer stocks may experience a pullback, and attention can be paid to structural opportunities such as semiconductors and new energy vehicles.
Yemeni Husai militants claim to have attacked two cargo ships in the Red Sea and Indian Ocean
According to Xinhua News Agency, Yehya Sareya, spokesperson for the Yemeni Husai armed forces, issued a statement on the 23rd stating that the organization had attacked two cargo ships in the Red Sea and Indian Ocean.
Sareya said that the Hussai armed forces attacked the cargo ship "Global Navigator" traveling in the Red Sea with unmanned vessels and the cargo ship "Stolte Sequoia" traveling in the Indian Ocean with missiles. Sareya did not disclose the specific times of the two attacks, stating that the attacks on these two ships were due to ships under his shipping company docked at Israeli ports.
A Yemeni government coast guard officer confirmed to Xinhua News Agency on the 23rd that the cargo ship "Global Navigator", flying the Liberian flag, was attacked by Hussai armed forces in the morning of the same day, and the ship was damaged with no casualties. The officer said that the cargo ship was attacked by missiles from the Houser armed forces while sailing in the Gulf of Aden on the 22nd.
After the outbreak of a new round of Palestinian Israeli conflict in October last year, the Yemeni Houthi armed forces repeatedly attacked targets in the Red Sea using drones and missiles. Since January 12th this year, the United States and the United Kingdom have launched multiple airstrikes on armed targets in Hussein, causing casualties. In early May, the Yemeni Houthi armed forces announced that they would expand their scope of attack, targeting all ships of companies that had traded with Israel in the past few months in the Red Sea, Arabian Sea, Indian Ocean, and Mediterranean, regardless of their nationality and target ports.