Big news is spreading in the US capital market!
According to The Wall Street Journal, a group supported by BlackRock and Castle Securities plans to establish a new stock exchange in Texas, aiming to challenge the New York Stock Exchange and Nasdaq Stock Exchange.
One important background is that the US stock market has been continuously bullish in recent years, with the NASDAQ index reaching the 17000 mark at the end of May. Since 2009, the index has risen nearly tenfold.
Analysts have pointed out that the establishment of the new stock exchange is expected to increase market competition and have an impact on the market share of existing exchanges, but it can provide investors with more choices.
New Stock Exchange
According to a report by The Wall Street Journal, insiders say that a group supported by Black Rock, Citadel Securities, and other investors is planning to launch a new national securities exchange in Texas, aiming to challenge the heavy regulation of the New York Stock Exchange and Nasdaq.
The new Texas Stock Exchange, the Texas Stock Exchange (TXSE), has raised approximately $120 million and plans to submit registration documents to the U.S. Securities and Exchange Commission (SEC) later this year.
James Lee, CEO of TXSE, stated that the exchange will attempt to attract companies seeking to alleviate the increased compliance costs of the New York Stock Exchange and Nasdaq. He stated that although TXSE is completely electronic, it will be headquartered in Dallas to support the metropolitan areas where financial jobs are obtained from companies such as Goldman Sachs Group Inc. and Jiaxin Wealth Management.
James Lee stated that TXSE's goal is to conduct its first trading in 2025 and go public for the first time in 2026. But any effort to compete with the New York Stock Exchange and Nasdaq will face severe challenges, while other emerging exchanges also face significant obstacles in their efforts to enter established markets.
A spokesperson for Castle Securities confirmed that the company is an investor in the aforementioned project. However, BlackRock declined to comment on this matter.
TXSE stated on its website, "The Texas Stock Exchange will focus on enabling US and global companies to enter the US stock capital market, and will provide trading and listing venues for listed companies and growing exchange traded products. TXSE will be a fully electronic national securities exchange seeking registration with the US Securities and Exchange Commission."
In the United States, stock trading is mainly concentrated on three major exchanges, namely the New York Stock Exchange (NYSE), NASDAQ, and AMEX.
Among them, the New York Stock Exchange is the world's largest stock exchange by market value, with over 1900 listed companies and a total market value of over 38 trillion US dollars; The Nasdaq Stock Exchange is the world's second-largest stock trading by market value, with over 3300 listed companies and a total market value of over 31 trillion US dollars. The size of the US stock exchange is relatively small, with over 240 listed companies and a total market value of over 100 billion US dollars.
On the evening of June 3rd this year, a technical malfunction occurred on the New York Stock Exchange, causing the A-class stocks of Berkshire Hathaway, a subsidiary of Warren Buffett, to plummet 99.97%. On June 4th, the New York Stock Exchange cleared all erroneous trades by Berkshire Hathaway, rendering any low price purchase of Buffett's stock invalid. In addition, the New York Stock Exchange has cleared erroneous trades related to Montreal Bank, Mexican barbecue, Barrick Gold, and more. The New York Stock Exchange stated that the reason for the abnormal quotation was a technical issue in the price range, which has been resolved.
On May 30th, the US stock market also encountered technical issues. On the day of trading, the S&P 500 and Dow Jones Industrial Average suddenly stopped real-time quotes for nearly 80 minutes, but individual stock trading was not affected.
The Nasdaq has risen nearly tenfold
Since the beginning of this year, the US stock market has repeatedly hit new highs. On May 15th, the S&P 500 index broke through 5300 points; On May 16th, the Dow Jones Industrial Average broke through the 40000 point integer mark for the first time in its history; On May 28th, the Nasdaq closed above 17000 points for the first time. Since 2009, the Nasdaq has risen nearly 10 times, the S&P 500 has risen nearly 5 times, and the Dow has risen more than 3 times.
Recently, the US stock market has remained volatile at high levels. As of the close on June 4th, the Dow Jones Industrial Average rose 0.36% to close at 38711.29 points; The Nasdaq index rose 0.17% to close at 16857.05 points; The S&P 500 index rose 0.15% to close at 5291.34 points. In terms of individual stocks, Nvidia rose more than 1%, with its stock price continuing to reach a historic high and a total market value of $2.86 trillion; Apple rose 0.16%, with a closing market value approaching $3 trillion.
Tianfeng Securities pointed out that since October 2023, the overall returns of the technology giants in the S&P 500 constituent stocks have been significantly higher than those of other stock portfolios, indicating that the US stock market has a higher exposure to larger heavyweight stocks. The ratio of the S&P 500 equity index to the weighted index has also broken through the low point in September 2020, once approaching the historical bottom since 2009, reflecting a high degree of crowding in the US stock market. In the future, it is necessary to pay attention to the possibility of a significant decline in the major weighted stocks of the US stock market under the low VIX index and the upward skewness index.
In terms of investment strategy, Tianfeng Securities stated that under the benchmark assumption of a soft landing of the US economy and continued loose financial conditions index, the US stock market may maintain an upward trend in the medium term, but there may be signs of market sentiment overheating in the short term, so it is advisable to maintain phased caution towards the US stock market.
Wall Street analysts also have clear disagreements on whether the US stock market can continue its upward trend in the coming months. Jeremy Folsom, investment strategy analyst at Wells Fargo, recently stated that the S&P 500 index is set to reach a historic high of 5700 points by the end of next year, partly due to significant gains before and after the 2012, 2016, and 2020 US presidential elections. Jeremy Folsom further explained that from early 2012 to the end of 2013, the S&P 500 index rose by 47%, and there was also a significant increase during the following two US presidential elections.
Jeremy Fulsom also said, "Although cash and cash substitutes are currently attractive, given that we expect interest rates to decline as the Federal Reserve's interest rate cycle ends, we believe this is not a good place for long-term capital investment."
Tom Lee, the head of research at Fundstrat, known as the "Wall Street miracle operator," recently stated that the stock market will receive positive support in June, and if there is a pullback, investors can buy on dips. He expects the S&P 500 index to rise to 5500 points in June, driven by five positive market catalysts: bullish seasonal factors, sustained anti inflation trends, low investor leverage, record breaking $6 trillion in "wait-and-see cash", and robust corporate earnings results.
Morgan Stanley's Chief Market Strategist, Kolanovich, said that the recovery of meme stocks is a bad omen for the overall US stock market. In his latest report, Kolanovich reiterated his bearish view on the stock market. Although the S&P 500 index is now less than 1% from its historical high, the strategist's target price is only 4200 points, which is the lowest on Wall Street, meaning the index will fall more than 20% from its current level.
Wall Street industry strategy analyst and Yahoo Finance executive editor Brian Sozzi believes that the current state of the technology industry may not be as healthy as it appears, and popular technology stocks may experience a pullback this summer, with investors re evaluating their valuations.