Affected by weak non farm payroll data and poor financial reports, major indices of European and American stock markets experienced a significant pullback on Friday local time, with the Nasdaq plummeting 2.43%. The fear index VIX, which measures volatility in the US stock market, surged 50% during the day, reaching its highest level since March 2023.
The market's expectations for the Federal Reserve's interest rate cuts have increased. Goldman Sachs, Citigroup, JPMorgan Chase, Bank of America and other major Wall Street banks collectively adjusted their interest rate cut forecasts, calling for early interest rate cuts, increased magnitude or frequency of cuts.
Funds are withdrawing from technology stocks. Previously, investors embraced the AI boom and heavily invested in technology stocks, but technology companies' crazy "burning money" in the AI field did not bring corresponding returns, and the market's concerns about the returns of AI investments are increasing. On Friday local time, Intel plummeted 26.06%, marking its largest decline in over 40 years.
European and American stock markets plummet
On Friday local time, major US stock indices experienced a significant decline. As of the close, the Dow Jones Industrial Average fell 610.71 points, a decrease of 1.51%, to 39737.26 points; The S&P 500 index fell 100.12 points, or 1.84%, to 5346.56 points; The Nasdaq fell 417.98 points, or 2.43%, to 16776.16 points. This week, the Dow Jones Industrial Average fell 2.1%, the S&P 500 index fell 2.06%, and the Nasdaq fell 3.35%. Among them, the S&P 500 index and the Nasdaq both recorded their third consecutive week of decline.
Popular Chinese concept stocks generally closed down, with the Nasdaq China Golden Dragon Index falling 1.84%, Alibaba falling 0.68%, JD.com falling 0.32%, Pinduoduo falling 0.32%, NIO falling 0.25%, Xiaopeng Motors falling 0.92%, Ideal Motors falling 0.88%, Baidu falling 2.23%, NetEase falling 1.24%, Tencent Music falling 5.04%, iQiyi falling 1.56%, and Bilibili rising 1.77%.
The market is concerned that the risk of a US economic recession will drive a global economic slowdown, and the three major European stock indexes have also fallen sharply. The German DAX index fell 2.33% to 17661.22 points, hitting a new low in nearly four months, and has fallen 4.11% this week; The French CAC40 index fell 1.61% to 7251.8 points, hitting an 8-month low and a weekly decline of 3.54%; The FTSE 100 index in the UK fell 1.31% to 8147.71 points, with a weekly decline of 1.34%.
Affected by the unexpected slowdown in non farm payroll data, the US dollar index fell 1.15%. Most non US currencies have risen, with offshore Chinese yuan rising over 1000 points against the US dollar at one point during the day, recovering from the 7.15 mark and currently trading at 7.1651.
In terms of commodities, international crude oil prices have fallen sharply. WTI September crude oil futures closed down $2.79, a decrease of 3.66%, at $73.52 per barrel, with a cumulative decline of 4.72% this week; Brent crude oil futures for October closed down $2.71, or 3.41%, at $76.81 per barrel, with a cumulative drop of 5.32% for the week.
Analysis suggests that despite the escalating tensions in the Middle East, weak economic growth in major economies may suppress oil demand, overshadowing supply concerns caused by tensions in the region.
Wall Street's major banks collectively adjust their expectations for interest rate cuts
Yesterday evening, the US non farm payroll data for July was released, with an increase of 114000 jobs in July, far below the expected 175000 jobs; The unemployment rate rose to its highest level in nearly three years in July, triggering market panic about an economic recession.
The market's expectations for the Federal Reserve's interest rate cuts have increased. Goldman Sachs, Citigroup, JPMorgan Chase, Bank of America and other major Wall Street banks collectively adjusted their interest rate cut forecasts, calling for early interest rate cuts, increased magnitude or frequency of cuts.
The team led by Goldman Sachs economist Jan Hatzius predicts that the Federal Reserve will cut interest rates by 25 basis points each in September, November, and December, compared to the bank's previous expectation of only two rate cuts in September and December. Jan Hatzius said that the July data may have exaggerated the weakness of the labor market, but if the August report also shows weakness, then a half percentage point rate cut in September "will become very likely".
Citigroup expects the Federal Reserve to cut interest rates by 50 basis points each in September and November, and by 25 basis points in December, which means the Fed needs to cut interest rates by 125 basis points this year. Previously, Citigroup had predicted a 25 basis point interest rate cut at each of the three meetings. JPMorgan also expects the Federal Reserve to cut interest rates by 50 basis points each in September and November.
Bank of America economists stated in a report that based on the weak July employment data released on Friday, economists have adjusted their forecasts for Federal Reserve policy and expect interest rate cuts to begin in September. Previously, the bank expected to start cutting interest rates in December.
Technology stocks experience widespread decline
Intel's biggest decline in over 40 years
Funds are withdrawing from technology stocks. Previously, investors embraced the AI boom and heavily invested in technology stocks, but technology companies' crazy "burning money" in the AI field did not bring corresponding returns, and the market's concerns about the returns of AI investments are increasing.
Large tech stocks collectively fell, with Microsoft falling 2.07%, Nvidia falling 1.78%, Google falling 2.40%, Amazon falling 8.78%, Meta falling 1.93%, and Tesla falling 4.24%. Intel fell 26.06%, marking its largest decline in over 40 years. Apple rose 0.69% against the trend.
On the news front, multiple technology stocks have been hit by bearish attacks. Among them, Intel's performance in the second quarter was far below market expectations, and it is expected that the guidance for the third quarter will disappoint the market. The company also announced plans to lay off more than 15% of its workforce, about 15000 people, within the year.
Amazon's Q2 revenue increased by 10% year-on-year to $148 billion, lower than market expectations of $148.5 billion; The net profit was 13.5 billion US dollars, a significant increase of 101% compared to the same period last year's 6.7 billion US dollars. However, Amazon expects its third quarter revenue to be between $154 billion and $158.5 billion, with a median of $156.25 billion, lower than market expectations of $158.24 billion, indicating that the company's high capital expenditures may lower profits.
Nvidia is under antitrust investigation by the US government. Nvidia has been complained by competitors that it may abuse its market dominance when selling artificial intelligence (AI) chips. According to reports, the US Department of Justice is investigating whether Nvidia forced cloud computing providers to purchase multiple Nvidia products. In addition, the US Department of Justice is conducting an antitrust review regarding Nvidia's acquisition of Israeli artificial intelligence startup Run: AI.
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