The US stock market is experiencing a roller coaster ride.
On Wednesday, September 18th local time, the three major US stock indexes collectively closed down. As of the close, the Dow Jones Industrial Average fell 0.25%, the Nasdaq fell 0.31%, and the S&P 500 index fell 0.29%.
On the news front, the Federal Reserve announced on the 18th local time that it would lower the target range of the federal funds rate by 50 basis points to a level between 4.75% and 5.00%.
Federal Reserve Chairman Powell stated that the Fed will maintain flexibility and adjust interest rates and other economic measures in a timely manner based on economic development and market demand.
The Federal Reserve cuts interest rates by 50 basis points, while the three major stock indices rise and fall.
On September 18th local time, the three major US stock indexes collectively closed down. Before the announcement of the interest rate decision, all three major indexes fluctuated narrowly. After the Federal Reserve announced a 50 basis point interest rate cut, the three indexes surged in the short term, with the Nasdaq rising nearly 1.2% at one point, but after Powell began speaking, it continued to fluctuate and decline. As of the close, the Dow Jones Industrial Average fell 103.08 points, or 0.25%, to 41503.10 points; The Nasdaq fell 54.76 points, or 0.31%, to 17573.30 points; The S&P 500 index fell 16.32 points, or 0.29%, to 5618.26 points.
Intuitive Machines, a space concept stock, surged 38.33%, and even rose over 60% during trading. The company has been awarded a $4.82 billion "Near Space Network" contract by NASA, covering interstellar data transmission relay and navigation services between Earth and the Moon. US steel rose 1.55%, and according to reports, the Committee on Foreign Investment in the United States (CFIUS) has approved Japan Steel Corporation to resubmit its merger application to acquire US Steel Corporation. In addition, BlackRock and Microsoft recently announced plans to launch a fund worth over $30 billion to invest in artificial intelligence infrastructure, build data centers, and energy projects.
After the rebound announced by the Federal Reserve today, it is not unreasonable for the market to fall back at all, "said Bret Kenwell of investment firm eToro." However, the long-term outlook remains optimistic. As long as the economy remains stable and inflation does not soar again, low interest rates and strong profit growth can continue to drive the stock market higher in the long run
On the news front, the Federal Reserve announced on the 18th local time that it would lower the target range of the federal funds rate by 50 basis points to a level between 4.75% and 5.00%. Federal Reserve Chairman Powell stated that if there were employment data at the time, the Fed would likely have cut interest rates in July, but did not do so.
After the interest rate decision was announced, the Chicago Mercantile Exchange's FedWatch tool showed a 62.2% chance of a 25 basis point rate cut at the Federal Reserve's November meeting.
(Source: Chicago Mercantile Exchange FedWatch tool)
The dot matrix chart released by the Federal Reserve shows that the Fed expects the federal funds rate to be 4.4% by the end of 2024, and 5.1% in June; The federal funds rate is expected to be 3.4% by the end of 2025 and 4.1% in June; The federal funds rate is expected to be 2.9% by the end of 2026 and 3.1% in June; The expected federal funds rate by the end of 2027 is 2.9%; The expected long-term federal funds rate is 2.9%, and it is expected to be 2.8% in June.
(Source: Federal Reserve)
Powell pointed out that this decision was made based on a comprehensive consideration of economic development and inflation, and this policy adjustment reflects the Federal Reserve's assessment of the current economic situation and its response to future inflation risks.
At the meeting, Powell emphasized that the Federal Reserve has not set any fixed pattern when adjusting the interest rate path and will make decisions based on upcoming economic data on a case by case basis. He stated that although inflation has fallen from its peak, it has not fully met the Federal Reserve's target. Therefore, the Federal Reserve will continue to closely monitor economic indicators to adjust its monetary policy in a timely manner.
In addition, Powell mentioned that although the economy is currently facing certain challenges, such as slower job growth and a slight increase in unemployment, the overall performance of the US economy remains strong. This is due to the active labor market and the continuous increase in consumer spending. The decisions of the Federal Reserve will continue to support sustained economic growth and stability in the job market.
Powell also stated that the Federal Reserve will continue to implement its balance sheet reduction plan and closely monitor the stability of financial markets. He mentioned that although the current housing and financial markets are under pressure, the Federal Reserve believes that the smooth operation of the market can be maintained through appropriate policy adjustments.
The meeting also discussed potential directions for future policies, with Powell emphasizing that the Federal Reserve will maintain flexibility and adjust interest rates and other economic measures in a timely manner based on economic development and market demand. He specifically mentioned that despite the current strong economic performance, the Federal Reserve will guard against potential economic downturn risks in the future and ensure sustained and healthy economic development.
It is worth mentioning that the Federal Reserve's decision to cut interest rates by 50 basis points this time exceeded the predictions of many institutions. According to incomplete statistics, four hours before the interest rate decision, most institutions including Morgan Stanley, Goldman Sachs, Bank of America, Citigroup, Wells Fargo, Barclays, HSBC, UBS, Macquarie, Deutsche Bank, and Bank of Montreal believed that the Federal Reserve would cut interest rates by 25 basis points, while only a few institutions such as JPMorgan Chase and Mitsubishi UFJ believed that the Federal Reserve would cut interest rates by 50 basis points.
Chris Larkin of Morgan Stanley said, "The market got what they wanted - the Federal Reserve's first significant rate cut. The Fed is known for not rushing for results, so if people think it's too slow to act, especially if economic data continues to weaken, it could be disappointing. But today they did it
In addition, the Federal Reserve has raised its forecast for the US unemployment rate in 2024 to 4.4%, which is expected to be 4.0% in June; Reduce the forecast for US GDP growth in 2024 to 2.0%, with June expected to be 2.1%; Lowering the core PCE inflation forecast for the United States in 2024 to 2.6%, expected to be 2.8% in June.
In other markets, US Treasury yields collectively rose, with 2-year yields up 1.1 basis points to 3.63%, 3-year yields up 2.1 basis points to 3.497%, 5-year yields up 4.1 basis points to 3.49%, 10-year yields up 5.8 basis points to 3.71%, and 30-year yields up 6.4 basis points to 4.026%.
The US dollar index, which measures the US dollar against six major currencies, fell 0.3% on the 18th and closed at 100.592 at the end of the foreign exchange market.
International oil prices fell on the 18th. As of the close of the day, the price of light crude oil futures for October delivery on the New York Mercantile Exchange fell by 28 cents, closing at $70.91 per barrel, a decrease of 0.39%; The London Brent crude oil futures price for November delivery fell 5 cents to close at $73.65 per barrel, a decrease of 0.07%.
International precious metal futures are currently experiencing a collective surge and decline. As of the close, London gold fell 0.40% to $2558.830 per ounce, while COMEX gold fell 0.29% to $2584.8 per ounce, both hitting historic highs during trading. London silver fell 2.04% to $30.057 per ounce, while COMEX silver fell 1.84% to $30.425 per ounce.
Microsoft BlackRock partners to establish AI investment fund
In terms of sectors, the 11 major sectors of the S&P 500 index rose 2 times and fell 9 times. Among them, the energy sector rose by 0.25%, and the communication services sector rose by 0.02%. The utility sector led the decline with a decrease of 0.77%, while the information technology sector and essential consumer sector fell by 0.51% and 0.44% respectively.
Most popular technology stocks closed down. Intel fell more than 3%, Netflix and ASML fell more than 2%, Nvidia, Oracle, AMD, Micron Technology fell more than 1%, Microsoft fell 1%, and AMD, Broadcom, Texas Instruments, Tesla, Qualcomm, Amazon, Cisco, and TSMC fell slightly; Meta、 Google A saw a slight increase, while Arm and Apple rose by over 1%.
Tesla fell 0.29%. Elon Musk's brain computer interface company Neuralink recently announced that its experimental implant device "Blindsight" aimed at restoring vision has obtained the "Breakthrough Device" certification from the US Food and Drug Administration (FDA). This tag is used to accelerate the development and review of medical devices currently under development, especially those that can treat or diagnose life-threatening conditions.
Musk announced on social platform X that even those who have lost their eyes and optic nerve will regain their vision through "Blindsight". Neuralink was founded in 2016, focusing on developing brain chip interfaces that can be implanted into the skull, with the aim of helping disabled patients regain mobility and communication abilities, and ultimately restore vision. At present, the company has not disclosed a specific timeline for the "Blindsight" device to enter human trials. The FDA has not commented on this either.
Apple rose by 1.80%. According to sources cited by Reuters, JPMorgan Chase is in discussions with Apple to replace Goldman Sachs as Apple's credit card partner. This discussion started earlier this year and has made progress in recent weeks, but any potential deal may still take several months to finalize. According to reports, Apple and JPMorgan are still in negotiations. Due to the involvement of high-risk customers in Apple's credit card project, JPMorgan hopes to take over at a more favorable price. If JPMorgan Chase and Apple reach an agreement, it will further strengthen cooperation between the largest bank in the United States and one of the world's largest technology companies.
Google A rose 0.31%. The EU General Court, the second highest court in Europe, announced on Tuesday that it would revoke the antitrust fine of 1.49 billion euros (approximately 11.8 billion yuan) imposed on Google five years ago. The EU General Court believes that the European Commission did not take into account all relevant circumstances when evaluating the duration of the contract terms that Google was deemed unfair.
Microsoft fell 1.00%. BlackRock and Microsoft recently announced plans to launch a fund worth over $30 billion to invest in artificial intelligence infrastructure, build data centers, and energy projects. BlackRock and Microsoft have stated that the investment tool, called the Global AI Infrastructure Investment Partnership, aims to help strengthen AI supply chains and energy procurement. Abu Dhabi backed investment firm MGX will become the general partner of the fund, while Nvidia will provide expertise. The two companies stated that if debt financing is included, this cooperation will mobilize a total investment potential of up to $100 billion. According to the two companies, the investment will primarily be in the United States, with the remainder to be made in their partner countries.
Amazon fell 0.24%. Amazon announced on Wednesday that it will increase the hourly wage of warehouse workers by at least $1.5 and include Prime membership in their benefit plan. Amazon has announced that it will implement salary increases for hundreds of thousands of employees in its massive logistics business this month, raising the average base salary to over $22 per hour.
Financial stocks fluctuate in price. BlackRock rose over 2%, while United Bank and Citigroup rose over 1%. Regional Finance, UBS Group, First Capital Financial, Bank of America, and Deutsche Bank rose slightly, while Mizuho Financial closed flat. Goldman Sachs, American International Group, Wells Fargo, Morgan Stanley, Travelers Insurance, and JPMorgan Chase fell slightly, while Visa, American Express, and Mastercard fell over 1%.
Most energy stocks fell. Brazilian oil fell more than 1%, while Duke Energy, Western Petroleum, Apache Oil, Imperial Oil, BP, American Energy, Schlumberger, and Murphy Oil saw slight declines. Shell, Marathon Oil, ConocoPhillips, ExxonMobil, and Chevron saw slight gains.
Most popular Chinese concept stocks closed down, with the Nasdaq China Golden Dragon Index falling 0.86%. NIO fell over 7%, Xiaopeng Motors fell over 4%, Ideal Auto fell nearly 3%, Bilibili fell over 2%, New Oriental and Manbang fell over 1%, Huya fell nearly 1%, Baidu, Vipshop, Tencent Music, NetEase, Alibaba, Pinduoduo fell slightly, JD.com closed flat, iQiyi rose slightly, Weibo rose over 1%, and Douyu rose over 2%.
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