On the 18th local time, the increasingly tense situation in the Middle East intensified risk aversion, with the three major US stock indices opening low and moving lower, with technology stocks leading the decline. As of the close, the Dow fell 0.98%, the S&P 500 index fell 1.34%, and the Nasdaq fell 1.62%. The panic index surged by nearly 10%. In addition, European stocks also generally fell.
The yield of US treasury bond bonds continued to rise. The yield of 10-year US treasury bonds exceeded 4.9% in the session, the highest level since July 2007. The US dollar index, which measures the US dollar against six major currencies, rose 0.30% on the same day and closed at 106.564 in the end of the foreign exchange market.
The international oil price surged, and the settlement price of WTI crude oil futures closed 1.92% higher at $86.66 per barrel; Brent crude oil futures settled 1.78% higher at $91.50 per barrel. The most active December gold futures market on the New York Mercantile Exchange rose $32.6 on the 18th to close at $1968.3 per ounce, an increase of 1.68%.
On October 18th local time, a spokesperson for the Gaza Strip Ministry of Health stated that the attack on the Baptist Hospital in the Gaza Strip has resulted in up to 700 deaths and hundreds of victims trapped under the ruins, all of whom are civilians. On the same day, Iranian Foreign Minister Abdullahian called on Islamic countries to "immediately and comprehensively boycott Israel", expel the Israeli ambassador, and implement an oil embargo on Israel.
In terms of individual stocks, Tesla plummeted by nearly 5%, with its market value evaporating $38.6 billion (approximately RMB 280 billion). Due to underperformance, the stock price continued to plummet after hours, dropping more than 5% at one point. In addition, Zhonggai's new energy vehicle stocks also fell, with Xiaopeng Automobile falling more than 10%, NIO falling more than 7%, and Ideal Automobile falling more than 1%.
US stocks closed sharply lower
On the 18th local time, the increasingly tense situation in the Middle East region intensified risk aversion, with the three major US stock indices opening low and moving lower. As of the close, the Dow fell 0.98% to 33665.08 points; The S&P 500 index fell 1.34% to 4314.60 points; The Nasdaq fell 1.62% to 13314.30 points.
On Wednesday, the CBOE Volatility Index (VIX), a measure of market panic, surged 9.2% to 19.52%.
The yield of US treasury bond bonds continued to rise. The yield of 10-year US treasury bonds exceeded 4.9% in the session, the highest level since July 2007. The US Treasury Department renewed the issuance of US $13 billion of 20-year treasury bond on Wednesday, with the bid winning yield of 5.245%, the highest on record.
Goldman Sachs Group has released its latest view that any potential stock market rebound in the future will face risks if geopolitical uncertainty further escalates.
A team of Goldman Sachs strategists, including Cecilia Mariotti, wrote in a report on Wednesday that although the resurgence of geopolitical risks may provide some breathing room for interest rates and increase the likelihood of central banks adopting more hawkish policies, "long-term geopolitical uncertainty, coupled with the still inflationary macro environment, may ultimately raise concerns about economic growth.
Goldman Sachs strategists believe that the prolonged conflict between Israel and Hamas may hit oil supply and suppress demand for risky assets. Goldman Sachs strategists also pointed out that at the same time, investors will also be concerned about the direction of monetary policy and rising bond yields. In this context, strategists predict that any easing rebound in the stock market before the end of the year will be short-lived.
A few days ago, Morgan Stanley Chief Strategist Wilson insisted on his cautious outlook for the US stock market and further predicted a 10% decline by the end of 2023.
Earlier this month, JPMorgan Chase's chief strategist warned that the stock market could plummet by 20% and said he was "unsure how we will avoid" an economic recession.
In terms of economic data, data released by the Mortgage Bankers Association (MBA) on Wednesday showed that in the week ending October 13th, US mortgage applications fell by 6.9%, the largest decline since April and fluctuating compared to the 0.6% increase in the previous week. This decline has lowered the index measuring mortgage demand to its lowest level since 1995. During this period, housing loan refinancing applications decreased by 9.9%, while home purchase applications decreased by 5.6%. This result is consistent with the Federal Reserve's active monetary tightening campaign, as the surge in long-term bond yields reflects a sharp increase in borrowing costs, thereby suppressing mortgage demand. The average contract interest rate of a 30 year fixed rate mortgage loan that meets the loan balance of $726200 or less has increased by 30 basis points to 7.7%, the highest level since November 2000.
In addition, the seasonally adjusted annualized rate of new home construction in the United States in September was 1.358 million households, with an estimated 1.383 million households, compared to the previous value of 1.283 million households. After the quarterly adjustment of construction permits in September, the annual discount rate was 1.473 million households, estimated to be 1.453 million households, and the previous value was 1.541 million households.
Tesla's performance falls short of expectations and its stock price plummets
In terms of sectors, the 11 major sectors of the S&P 500 index fell nine times and rose two times. The materials and industrial sectors led the decline with declines of 2.58% and 2.43% respectively, while the energy and essential consumer goods sectors rose by 0.93% and 0.39%, respectively.
Large technology stocks generally fell, with Tesla down nearly 5%, NVIDIA down nearly 4%, Netflix, Amazon, and Facebook parent company Meta down more than 2%, Intel and Google A down more than 1%, and Apple and Microsoft slightly down.
Tesla plummeted by 4.78% and its market value evaporated overnight by $38.6 billion (approximately 280 billion yuan). On the news, Tesla's revenue for the third quarter was $23.4 billion, with analysts expecting $24.06 billion. Adjusted earnings per share for the third quarter were $0.66, while analysts expected $0.74. The gross profit margin for the third quarter was 17.9%, with analysts expecting 18%. After the financial report was released, Tesla's stock price briefly rose after trading, but then returned to a decline, falling by over 5% at one point.
Tesla will implement production line upgrades in the third quarter to ensure a reduction in unit costs. Maintain the annual production guidance at 1.8 million vehicles, and analysts expect to deliver 1.82 million vehicles. Cyberrack is scheduled to begin delivery at a super factory in Texas on November 30th.
Tesla CEO Elon Musk stated that achieving large-scale production and positive cash flow for Cybertruck will face significant challenges, and its expansion will be "very difficult". Cyberrack will take one to one and a half years to contribute to cash flow. Currently, 1 million people have booked Cyberrack. Tesla plans to produce 250000 Cyberracks annually by 2025.
It is worth mentioning that "Wooden Sister" Cathie Wood sold Tesla's stock for several consecutive days before the release of its third quarter financial report, with a cumulative selling value of over $58 million.
There is speculation from the market that the continuous selling of "Mu Jie" before the financial report is understood as "bearish". In response, "Mu Jie" explained that, This is just a routine position adjustment: "In the past six months, Tesla's stock price has risen more than 2.5 times, while some other stocks we invest in are still close to their lows. When Tesla's weight in the investment portfolio exceeds 10%, we will reduce our holdings and allocate funds to stocks that we believe are not fully understood by others
Wood Sister firmly expressed her optimism towards Tesla, believing that Tesla has greater development potential in the next five years than NVIDIA, and Ark often uses this timeline when making portfolio decisions.
NVIDIA fell 3.96% again after a sharp drop of 4.68% in the previous trading day. In a statement submitted to the US SEC, NVIDIA disclosed that in addition to the previous A100 and H100, the products affected by the latest rules also include the A800, H800, L40, L40S, and home gaming graphics card 4090, as well as all graphics cards that (in the future) perform better than this standard. It is worth mentioning that both Citigroup and Morgan Stanley have lowered their target price expectations for Nvidia. Among them, Citigroup has lowered the Nvidia target price from $630 to $575.
Netflix rose by over 12%, resulting in a net increase of 8.76 million paid streaming users in the third fiscal quarter previously announced, higher than analysts' expectations of an increase of 6.2 million.
Asma fell more than 4%, with net sales of 6.673 billion euros and net profit of 1.893 billion euros in the third quarter, a slight decrease of 3.3% and 2.5% compared to the previous quarter. The net booking amount during the period was 2.6 billion euros, much lower than the market expectation of 4.5 billion euros, a significant decrease of 42.17% compared to the previous period. The company reiterated its guideline of a 30% increase in net sales for the entire year of 2023. Peter Wennink, the CEO of the company, stated that the semiconductor industry is currently experiencing the bottom of the cycle, and our clients expect a turning point by the end of this year.
General Motors fell nearly 3%, and its spokesperson Jim Cain confirmed on October 18th that General Motors has postponed the annual Investor Day event from November 16th to the first half of next year, seeking to focus on reaching a labor agreement with the United Auto Workers (UAW). Jim Kane stated that General Motors informed investors of its rescheduling decision last week.
Morgan Stanley fell nearly 7%, marking its largest daily decline since June 2020. The bank's net revenue for the third quarter was $13.27 billion, with an estimated $13.2 billion. Earnings per share are $1.38. The wealth management revenue in the third quarter did not meet expectations.
Chinese concept stocks generally fell, while Xiaopeng Automobile fell more than 10%
Most popular Chinese concept stocks fell, with Xiaopeng Automobile falling by over 10%, NIO falling by over 7%, Bilibili and Baidu falling by over 4%, JD.com falling by nearly 3%, Weibo falling by over 2%, and Ideal Automobile, iQiyi, Vipshop, and Alibaba falling by over 1%; Tencent Music rose by over 1%, while Pinduoduo and NetEase saw a slight increase.
Federal Reserve Releases Brown Book
The Federal Reserve released the Brown Book on Wednesday. The brown book shows that the outlook for the US economy is stable or slowing down, with most regions indicating little change in economic activity since the September report. Due to differences in prices and product supply, consumer spending is mixed, especially among general retailers and car dealerships. Tourism activities continue to improve, but some regions report a slight slowdown in consumer travel, while a few regions have noticed an increase in business travel. The bank's contact person reported a slight or slight decrease in loan demand. The quality of consumer credit is described as stable or healthy, with default rates still at historical lows but slightly increasing. The real estate situation has hardly changed, and the inventory of houses for sale is still very low. Manufacturing activities are mixed, although contacts from multiple regions have noticed improvements in the industry's prospects.
The brown book also pointed out that the tension in the national labor market continues to ease. Most regions report slight or moderate overall employment growth, and company recruitment is less urgent. Several regions have reported improvements in recruitment and retention as the candidate pool expands. However, most regions still report ongoing challenges in recruiting and hiring skilled workers. The wage growth in most regions remains moderate to moderate.
In addition, prices generally continue to rise at a moderate rate. Various regions have pointed out that the increase in input costs for manufacturers has slowed down or stabilized, but the increase in input costs for service industry companies continues to rise. The increase in fuel costs, wages, and insurance has driven the growth of prices in various regions. The growth rate of sales prices is lower than that of input prices, as consumers are becoming increasingly sensitive to prices, making it difficult for businesses to pass on cost pressures. As a result, the company struggled to maintain ideal profit margins. Overall, companies expect prices to rise in the coming quarters, but at a slower pace than in previous quarters.
Musk X platform plans to charge annual fees to posting users
Musk's social media platform X (formerly Twitter) has released a statement stating that it is testing a program called "Not A Bot" that charges new unverified users $1 per year to post on X.
X stated that it will first be piloted on websites in New Zealand and the Philippines. New users need to join the Not A Bot or Premium Blue Label program in order to use the main features including tweets, replies, citations, forwards, likes, bookmarks, and creating lists. The Premium Blue Label program charges $8 per month. New users who have not paid fees can only read posts, watch videos, and follow their accounts.
The X affiliate account stated that this new plan aims to defend against robots and spammers attempting to manipulate the platform and interfere with the experience of other X users, while balancing the platform's accessibility and fees. But this plan is not solely based on profit considerations.
This new policy currently only targets new users in New Zealand and the Philippines who have not been verified by mobile phones, and existing users are not included in the fee.
Musk has repeatedly publicly stated that it will charge ordinary users. Twitter has introduced a regulation that limits the daily reading volume of tweets by platform users. Authenticated users can read up to 6000 posts per day, while unverified accounts can only read 600 posts per day, while unverified new accounts can only view 300 tweets per day. This move sparked a lot of protests on Twitter, and although Musk later claimed that it was just a temporary regulation introduced to address Twitter's widespread crawling, it still left many people skeptical that Musk wanted more users to open Blue V membership.
Faced with the upcoming reality of charging, Twitter users are clearly not very satisfied. In the comment section below the X account, many users expressed dissatisfaction and believed that instead of charging users, X should upgrade its algorithm well.
The vote for the second round of the US House of Representatives presidential election remains inconclusive
According to CCTV news, on October 18th local time, in the second round of voting for the Speaker of the United States House of Representatives, no candidate had more than 217 votes and was unable to successfully elect the Speaker of the House.
On that day, Republican candidate Jim Jordan received 212 votes, while Democratic candidate Hakim Jeffries received 199 votes.