On the eve of the Federal Reserve's latest interest rate decision, the three major stock indexes in the US stock market collectively closed down, with the Dow Jones Industrial Average falling for nine consecutive days, setting a record for the longest consecutive decline since February 1978. In terms of individual stocks, the quantum computing concept stock Quantum Computing surged, with Tesla and Apple both reaching new historical highs.
For the upcoming Federal Reserve decision, institutions generally believe that it will continue to cut interest rates by 25 basis points, but the pace of subsequent rate cuts will slow down.
In the commodity market, overnight international gold and oil prices collectively weakened. According to institutional judgment, the short-term adjustment of oil prices maintains a relatively resilient pace, and we are optimistic about the long-term allocation opportunities of gold.
The Dow Jones Industrial Average has set a record for consecutive declines at a certain stage
Data shows that on December 17th local time, the three major US stock indexes opened lower and fluctuated weakly during the trading session. As of the close, the Dow Jones Industrial Average, Nasdaq, and S&P 500 index fell 0.61%, 0.32%, and 0.39% respectively, with the Dow Jones Industrial Average experiencing nine consecutive daily declines, setting a record for the longest consecutive decline since February 1978.
The reason for the decline of the Dow Jones Industrial Average is that funds have flowed out of some traditional economic sector stocks and shifted towards technology stocks. These traditional economic stocks dominate the Dow Jones Industrial Average. Industry insiders say that part of the reason driving profit taking in non tech stocks is the upcoming Federal Reserve interest rate decision. In addition, Nvidia joined the Dow Jones Industrial Average in November as a new technology component. Despite the recent strong performance of the technology sector, Nvidia has encountered difficulties, with a cumulative correction of over 10% since its peak on Monday, entering a technical adjustment range.
In terms of individual stocks, quantum computing concept stocks generally rose, with Quantum Computing jumping short and opening high, rising more than 51% as of the close, and hitting a new historical high in intraday stock prices. On the news front, the company previously stated that it had signed a contract with NASA.
Among large technology stocks, Tesla rose by over 3% and Apple rose by nearly 1%, both of which continued to reach new highs during trading; Nvidia continues its recent pullback trend, closing down over 1%.
Popular Chinese concept stocks listed in the United States have generally risen. As of the close, the Nasdaq China Golden Dragon Index rose nearly 2%, Hesai Technology rose over 36%, Lotus Technology, Dingdong Maicai, and Jike all rose over 6%, and Tiger Securities and Legend Biotech both rose over 5%.
The Federal Reserve may implement a 'hawkish interest rate cut'
For global investors, especially those in the US stock market, the latest interest rate decision to be released by the Federal Reserve has become a top priority for their attention.
Data shows that at 3am Beijing time on Thursday, the Federal Reserve will announce its last interest rate decision of the year. Currently, market institutions generally expect the Federal Reserve to cut interest rates by 25 basis points as scheduled. However, based on previous statements from Federal Reserve officials, the Fed may cautiously consider the pace of interest rate cuts in the future. Some institutions have warned that the Fed may pause interest rate cuts in early 2025.
Debon Securities believes that there is a high probability that the Federal Reserve will implement a "hawkish interest rate cut" this time, announcing a 25 basis point rate cut while releasing a signal to slow down the pace of interest rate cuts in the future. It is important to pay close attention to the anonymous voting in this "dot matrix".
Debon Securities predicts that the Federal Reserve's outlook for interest rate cuts in 2025 will fall back to 2 to 3 times, and the economic data outlook may improve the forecast for the inflation center in 2025. The outlook for the economy and unemployment rate may also be slightly adjusted. For the US stock market, the overall market may face the risk of a pullback, but compared to small and medium-sized indexes, the resilience of the overall market index may be better.
International gold and oil prices collectively fall
In terms of the commodity market, overnight international gold prices and crude oil prices collectively weakened.
Data shows that as of 5:50 am Beijing time on December 18th, the COMEX gold futures price and COMEX silver futures price have fallen by 0.3% and 0.26% respectively. The main contract for NYMEX crude oil futures fell 0.64%, falling below the $70 per barrel mark; The main ICE oil futures contract fell 0.77%.
Huachuang Securities believes that the central bank's purchase of gold supports long-term demand for gold, and the interest rate cut cycle also boosts investment demand for gold. It is optimistic about the long-term allocation opportunities brought by the meeting of the anti globalization process and the interest rate cut cycle for gold, and recommends precious metal targets with growth potential and clear future production growth plans.
For international oil prices, Haitong Futures believes that the current factors affecting the crude oil market are still complex, but there is a lack of unilateral factors to break the stalemate. Considering that short-term bullish factors dominate in oil prices, the adjustment of oil prices should maintain a relatively resilient pace.