Last night, international major banks experienced a significant drop during trading.
On September 10th local time, the three major US stock indices closed with mixed gains and losses, with the S&P 500 index closing higher for the second consecutive trading day. The US stock market has entered a critical juncture, as the August Consumer Price Index (CPI) will be released this Wednesday, and the Federal Reserve will hold its September monetary policy meeting next week.
JPMorgan Chase closed down 5.19%, the largest daily decline in four years; Diving during the trading session resulted in a drop of over 7% at one point. The company's President and Chief Operating Officer, Daniel Pinto, stated at an industry conference that the external estimate of JPMorgan's net interest income (NII) at $89.5 billion is "not very reasonable" considering interest rate expectations, and the actual data will be lower than this. Pinto's remarks have intensified analysts' pessimistic expectations for major US banks.
In addition, international crude oil prices have plummeted, with Brent crude hitting a new low since December 2021.
The rise and fall of the US stock market are mixed
On September 10th local time, the three major US stock indexes closed with mixed gains and losses. The Dow Jones Industrial Average fell 92.63 points, or 0.23%, to 40736.96 points; The Nasdaq rose 141.28 points, or 0.84%, to 17025.88 points; The S&P 500 index rose 24.47 points, or 0.45%, to 5495.52 points.
At present, the sentiment in the US stock market is cautious. Investors are closely monitoring concerns about a US recession and the possibility of an economic soft landing. With the cooling of the labor market, many market participants are concerned that the actions of the Federal Reserve may have fallen behind actual needs.
From a historical perspective, September was a month of weak stock market performance. Investors remain cautious about the impact of seasonal factors on the stock market and the uncertainty surrounding the upcoming US presidential election on November 5th.
This week, traders are focusing on two key economic reports that may become the next catalyst for the stock market. The August CPI report will be released on Wednesday, followed by the Producer Price Index (PPI) on Thursday.
The August non farm payroll report released last Friday showed that the number of non farm payrolls in the United States increased by 142000, lower than economists' expectations, which led to a sell-off in the US stock market.
In terms of economic data on Tuesday, optimism among small businesses in the United States recorded its largest decline in over two years last month, with deteriorating profitability and increasingly pessimistic views on sales and economic prospects.
The National Federation of Independent Business (NFIB) Small and Medium Business Confidence Index fell 2.5 points in August, the largest decline since June 2022, to 91.2. This decline erased nearly half of the previous four months' gains.
Among the 10 sub indicators of the index, 8 have declined, with the sales expectation indicator leading the decline by 9 points. Due to the continued impact of high prices, interest rates, and labor costs on businesses, approximately 37% of companies reported a decline in profitability, the highest proportion since 2010.
Among the companies reporting a decline in profits, 31% attributed it to weak sales, and 17% attributed it to material prices. Another 13% mentioned labor costs. The report shows that nearly a quarter of business owners stated that inflation is their biggest single problem, far higher than the long-term average of 3% from 1986 to mid-2020.
The Federal Reserve will hold a monetary policy meeting on September 17-18 (next week). Currently, investors are betting that the Federal Reserve will take interest rate cuts, which will help alleviate concerns about economic weakness.
Just two weeks ago, the US stock market was at a historic high due to market expectations that the Federal Reserve would provide new stimulus measures to the economy by reducing borrowing costs. But with the crucial labor market slowing down, manufacturing activity shrinking, and inflation falling, market sentiment has changed.
According to the Chicago Mercantile Exchange's (CME) FedWatch Tool, the money market sees a 73% chance of a 25 basis point rate cut by the Federal Reserve, and expects the Fed to relax monetary policy by a total of 100 basis points by the end of 2024.
On the evening of the 10th local time (9am Beijing time on the 11th), former US President Trump will have a debate with US Vice President Harris.
Prior to the debate between Harris and Trump, the Chicago Mercantile Exchange's Cboe Volatility Index (VIX), which measures the level of market panic, was around 20. Compared to the average index of 14.8 in 2024, this indicates an increased demand for protecting stock volatility.
According to Bank of America data, VIX typically rises by about 25% between July and November of election years, as investors are more concerned about the impact of candidate policy proposals on the market.
JPMorgan Chase fell over 7% at one point, CEO warns Wall Street expectations too optimistic
In terms of sectors, the 11 major sectors of the S&P 500 index rose nine times and fell two times. The real estate sector and non essential consumer goods sector led the gains with an increase of 1.77% and 1.39% respectively, while the energy sector and financial sector fell by 1.92% and 0.98% respectively.
Most large tech stocks have risen. Oracle rose over 11%, Broadcom rose over 5%, Tesla rose over 4%, AMD rose over 3%, Amazon and Microsoft rose over 2%, Nvidia rose over 1%, AMD, Qualcomm, and ASML rose slightly, Meta, Google-A, TSMC, Netflix, Apple, and Intel fell slightly, and Boeing fell over 1%.
Cloud platform company Oracle rose 11.44%, with a transaction volume of 6.449 billion US dollars. The company's first quarter revenue, profit, and highly anticipated cloud infrastructure revenue all exceeded expectations, calling the multi cloud agreement signed with Amazon AWS a "milestone" event. The company's Q1 operating revenue increased by 7% year-on-year to 13.3 billion US dollars, with analysts expecting 13.23 billion US dollars; Among them, the highly anticipated cloud infrastructure revenue increased by 45% year-on-year to 2.2 billion US dollars, with analysts expecting 2.18 billion US dollars. Net profit increased by 18% year-on-year to $4 billion on a non GAAP basis, compared to $2.9 billion on a GAAP basis. The company has signed a multi cloud agreement with Amazon AWS, and the 23ai version of Oracle's latest technology Exadata hardware and database software will be embedded in AWS cloud data centers. When it goes live in December this year, AWS customers will have easy and convenient access to Oracle databases.
Broadcom rose 5.25%, with a transaction volume of 5.268 billion US dollars. Recently, Broadcom released its FY2024 Q3 performance report. The CEO of the company stated that in Q3 of FY24, the company's consolidated net revenue was $13.1 billion, a year-on-year increase of 47%, and operating profit increased by 44% year-on-year. Among them, the revenue of the semiconductor solutions department was 7.3 billion US dollars, accounting for 56% of the total revenue for this quarter, a year-on-year increase of 5%. The gross profit margin of the semiconductor solutions department was approximately 68%, a year-on-year decrease of 270 basis points, mainly due to the impact of more customized AI accelerator portfolios. Due to increased research and development investment, operating expenses increased by 11% year-on-year, reaching $881 million, with a semiconductor operating profit margin of 56%. Broadcom stated that various signs clearly indicate that semiconductors have passed the bottom. In the non AI field, demand for non AI semiconductors increased by 20% in Q3 and is expected to continue to recover in Q4. The company's senior management stated that the demand for AI remains strong, and it is expected that AI revenue in Q4 will increase by 10% month on month, exceeding $3.5 billion. This will bring AI revenue to $12 billion in FY24, higher than the previous expectation of over $11 billion. Broadcom executives stated that they expect Q4 semiconductor revenue to be approximately $8 billion, a year-on-year increase of 9%. In terms of infrastructure software, the expected revenue is about 6 billion US dollars. Therefore, the company expects a comprehensive revenue of approximately $14 billion in Q4, a year-on-year increase of 51%. The company stated that this will drive Q4's adjusted EBITDA to approximately 64% of revenue, meaning that FY24's revenue expectations will increase to $51.5 billion and the adjusted EBITDA to 61.5% of full year revenue.
Tesla rose 4.58%, with a transaction volume of 17.426 billion US dollars. It is reported that the European Union will lower the proposed import tax rate on electric vehicles imported from China. According to reports, Deutsche Bank analyst Edison Yu gave Tesla's stock its first rating on Tuesday: a "buy" with a target price of $295, and advised investors not to pay attention to the "temporary" weakness in vehicle delivery and profit margin trends. He believes that Tesla is not just an automotive company, so he has different opinions on Tesla's stock valuation. He said, "Essentially, we don't see Tesla as an automaker, but as a technology platform attempting to reshape multiple industries, and it deserves a unique valuation framework
Most financial stocks have fallen. JPMorgan Chase fell more than 5%, Deutsche Bank and Goldman Sachs fell more than 4%, First Capital Financial fell more than 3%, Citigroup, Barclays, and American Express fell more than 2%, Morgan Stanley, UBS Group, Hershey's Insurance, Wells Fargo, MetLife, and Regional Finance fell more than 1%, while American International Group, Bank of America, Travelers Insurance, Mizuho Financial, Bank of America, Bank of New York Mellon, Visa, and Hartford Financial saw slight declines, while Jiaxin Wealth Management, Mastercard, and BlackRock saw slight gains.
JPMorgan Chase closed down 5.19%, the largest daily decline in four years, with transactions of $5.774 billion and a total market value of $584.9 billion (approximately RMB 4.16 trillion).
The company's President and Chief Operating Officer, Pinto, stated at an industry conference that external analysts' forecasts for the bank's expenses and net interest income next year are too optimistic. Pinto mentioned that the external estimate of J.P. Morgan's net interest income (NII) is $89.5 billion, which is "not very reasonable" considering interest rate expectations, and the actual data will be lower than this. Pinto's remarks have intensified analysts' pessimistic expectations for major US banks.
Goldman Sachs closed down 4.39%, closing at $1.643 billion. Goldman Sachs CEO David Solomon warned on Monday that trading revenue for the third quarter is likely to decline by 10%.
Energy stocks fell across the board. Apache Oil fell more than 4%, Petrobras and ExxonMobil fell more than 3%, Imperial Oil, Shell, BP (US), and Schlumberger fell more than 2%, Marathon Oil, ConocoPhillips, Chevron, American Energy, and Western Petroleum fell more than 1%, and Duke Energy fell slightly.
ExxonMobil closed down 3.64% with a transaction volume of $2.328 billion. On Tuesday, international crude oil prices fell sharply, putting pressure on the crude oil sector. In addition, it has been reported that ExxonMobil has closed its Hoover oil platform in the Gulf of Mexico due to the impact of the storm. Tropical storm Francine, which is moving northward in the Gulf of Mexico, has intensified, prompting oil drilling companies to evacuate workers and suspend some offshore crude oil production. At the same time, the US Coast Guard has warned shipping companies that strong winds are imminent. At 13:00 on September 9, Houston time, a forecaster of the US government said in a notice that "Francine" was expected to hit parts of the Gulf Coast with strong winds and rainstorm, and landed as a full hurricane on Wednesday. Companies such as Chevron, ExxonMobil, and Shell have taken response measures, such as evacuating workers from vulnerable facilities, suspending drilling activities, and shutting down some oil wells.
Popular Chinese concept stocks fluctuated, with the Nasdaq China Golden Dragon Index (HXC) closing up 0.06%. Tencent Music and Tiger Securities fell more than 4%, Huya, NIO, NetEase, iQiyi, and Futu Holdings fell more than 1%, Kingsoft Cloud, Ctrip, and Bilibili fell slightly, JD.com, Baidu, and Pinduoduo rose slightly, New Oriental and Vipshop rose more than 1%, Xiaopeng Motors and Alibaba rose more than 2%, and Ideal Auto rose more than 3%.
Ideal cars have increased by 3.87%. Ideal Auto sold 10700 units per week, ranking third on the luxury brand sales chart.
Alibaba rose 2.9%. Alibaba has officially been included in the Hong Kong Stock Connect and is highly regarded by Morgan Stanley.
In other markets, West Texas Intermediate (WTI) futures for October delivery on the New York Mercantile Exchange closed down $2.96, or 4.31%, at $65.75 per barrel. Since the beginning of the year, WTI crude oil in the United States has fallen by 8.2%.
The Brent crude oil futures price for November delivery on the European Intercontinental Exchange closed down $2.65, or about 3.7%, at $69.19 per barrel, hitting a new low since December 2021. Since the beginning of the year, Brent crude oil, which serves as the global benchmark for crude oil prices, has fallen by 10.2%.