The S&P 500 index returns above 5000 points
The "New Bond King" warns that the current situation of the US stock market is similar to the beginning of the previous bear market
Nvidia replaces Google to become the third largest company in terms of stock market value
After the largest daily decline in nearly a year, the US stock market recovered some of its losses on Wednesday. As of the close, the Dow Jones Industrial Average rose 151.52 points, or 0.40%, to 38424.27 points; The S&P 500 index rose 47.45 points, or 0.96%, to 5000.62 points; The Nasdaq closed at 15859.15 points, up 203.55 points, or 1.30%.
Star technology stocks rose generally, with Netflix closing 4.5% higher, Meta and Tesla up 2.9% and 2.6% respectively, and Qualcomm up 2.6%.
"New Bond King" Sings Short on US Stocks
Jeffrey Gundlach, founder of DoubleLine Capital and the "new bond king", warned on Tuesday that the current level of US stocks is similar to the beginning of the previous bear market. He explained that the record breaking in the stock market was due to high expectations of interest rate cuts, and the current level of overvaluation of stocks is similar to early 2022. He suggested that investors turn to the bond market and cash. More than two years ago, the previous bull market in the US stock market peaked, with the S&P 500 index reaching a historic high on January 3, 2022. Since then, the Federal Reserve's aggressive interest rate hike cycle has led to a pullback in the US stock market, with a decline of 25% and reaching its bottom in October of the same year.
"There is a lack of substantial improvement in inflation, and implementing six interest rate cuts between May and the end of the year is too much in my opinion." Gunlak said, "The January Consumer Price Index (CPI) was higher than expected, and the prospect of interest rate cuts is bleak. Future economic data may not bring much comfort to the market, and a three-month rebound in core CPI annual rates may indicate that inflation is sticky.".
Former Federal Reserve economist Claudia Sahm stood up, writing that now is not the time to delay interest rate cuts. Keeping interest rates at current levels will only increase the risk of recession. "The higher than expected increase in CPI in January is largely attributed to rising housing costs. Although the Federal Reserve's most important inflation indicator should be more moderate, the path of inflation falling is still bumpy." She further stated that causing greater impact on other economic sectors and financial markets will be a mistake that the Federal Reserve must avoid this year.
NVIDIA Ranks Third in US Stock Market Value
In terms of individual stocks, Nvidia rose 2.5% and its market value climbed to $1.83 trillion, replacing Google as the third largest company in the US stock market, only behind Microsoft and Apple. Google's current market value is $1.81 trillion. Nvidia has become a new favorite on Wall Street, and analysts believe that the company's business and stock growth will not stop soon. They also have high expectations for its fourth quarter performance, and the company will release its list on the 21st. Previously, Nvidia's revenue guidance was $20 billion, with a positive and negative deviation of 2%, higher than market expectations of $17.8 billion. Recently, major banks have raised their target prices, with Bank of America raising its target price from $700 to $800, and Goldman Sachs significantly increasing its target price from $625 to $800.
The stock price of ride hailing company Lai Fu Che surged 35.1%. The company released its fourth quarter financial report after market hours on Tuesday, with revenue of $1.22 billion, a year-on-year increase of 4%, a net loss of $26.3 million, a significant narrowing of the loss of $590 million compared to the same period last year. Looking ahead to the first quarter, the company expects a total order volume of $3.5-3.6 billion, higher than Wall Street's expectations. Since its listing in 2019, Lai Fu Auto has been facing operational difficulties, competing with the larger market Uber by burning money to subsidize drivers. Despite the stock's sharp rise on Wednesday, it is still 77% lower than the IPO price of $72.
In terms of commodities, international oil prices fell on Wednesday. Due to a decrease in US demand and a surge in inventories, WTI crude oil futures fell $1.23, a decrease of 1.6%, to $76.64 per barrel; Brent crude oil futures closed at $81.60 per barrel, down $1.17 or 1.4%. According to data from the US Energy Information Administration, in the week ending on the 9th, US crude oil inventories surged by 12 million barrels to 440 million barrels month on month, far exceeding market expectations for a growth of 2.6 million barrels.
Gold prices continued their decline, falling below the key level of $2000 per ounce, mainly due to higher than expected inflation, which led investors to lower their bets on early interest rate cuts by the Federal Reserve. Spot gold fell 0.1% to $1991.09 per ounce, the lowest level since December last year.