This Friday, the three major indexes of the US stock market collectively fell sharply, with the Dow Jones falling 410.34, a decrease of 1.01%; NASDAQ fell 436.83 points, a decrease of 2.55%; The S&P 500 fell 94.99 points, or 1.73%. This week, the Dow Jones fell 2.93%; NASDAQ fell 5.77%; The S&P 500 fell 4.25%.
01
Large tech stocks suffer heavy losses
On Friday, large tech stocks in the US performed poorly, with Broadcom falling more than 10%, marking its worst single day performance since March 2020. Tesla fell more than 8%; ARM、 Google and Nvidia fell more than 4%; Amazon and Meta fell more than 3%; Netflix and Intel fell more than 2%; Microsoft fell more than 1%; Apple has experienced a slight decline. Looking at this week, ASML fell more than 16%; Broadcom fell more than 15%; Nvidia fell more than 13%; Google fell more than 7%.
02
Most popular Chinese concept stocks have fallen
As for Chinese concept stocks, the Nasdaq China Golden Dragon Index fell 0.77% on Friday, with a cumulative decline of 0.83% this week. Xiaopeng Motors fell more than 3%; IQiyi, Ideal Auto, Futu Holdings, and Baidu fell more than 2%; Bilibili, Alibaba, Weibo, JD.com, Tencent Music fell more than 1%; NetEase experienced a slight decline. On the contrary, NIO rose by over 3%; Manbang has risen by over 1%; Vipshop and Pinduoduo saw slight increases.
03
Non farm data shows weak performance
In the eyes of market participants, the collective decline of the three major US stock indices on Friday is closely related to the latest August non farm payroll report released that day.
On the evening of September 6th Beijing time, the US Bureau of Labor Statistics released its non farm payroll report for August, which showed that the number of non farm jobs in the United States increased by 142000 in August, lower than the expected 165000, and the previous value was an increase of 114000; The unemployment rate in the United States in August was 4.2%, which is in line with expectations and slightly lower than the previous value (4.3%), marking the first decline since March this year.
In addition, the US Department of Labor has significantly revised down the non farm payroll numbers for June and July. The number of new non farm employment in June was revised down from 179000 to 118000; The number of new non farm employment in July was revised from 114000 to 89000. After the revision, the total number of new jobs added in June and July was 86000 lower than before the revision.
There has been some discussion in the market about whether such non farm payroll data is good or bad. Some people believe that the latest non farm payroll data is lower than expected, coupled with the continuous downward revision of previous non farm payroll data, which will increase market concerns about a US economic recession. Emily Roland, Co Chief Investment Strategist at John Hancock Investment Management, said, "After the release of non farm payroll data, the stock market's decline was driven by sentiment, mainly driven by concerns about US economic growth
However, US Treasury Secretary Yellen believes that Friday's non farm payroll report confirms that even if the labor market slows down, it is still healthy and the job market will not further weaken. Yellen further stated, "Adding 142000 new jobs per month is a very healthy and sustainable growth rate, which is also what we hope to see. By historical standards, a 4.2% unemployment rate is still quite low
04
Is the Federal Reserve's interest rate cut more suspenseful?
This seemingly good but not good data undoubtedly adds more suspense to the Federal Reserve's September interest rate cut drama. Former US Treasury Secretary Lawrence Summers said that although the August employment report was not particularly bad, it did make it more difficult to predict the magnitude of the Fed's interest rate cuts this month. Summers said, "These data certainly do not show significant weakness, but if you are concerned about recent statistical trends, the new data does not provide you with a proof of economic health
Previously, there were voices in the market that the Federal Reserve would directly cut interest rates by 50 basis points in September. From the latest Federal Reserve interest rate monitoring tool, it can be seen that there is a new situation in the market, with a probability of a 25 basis point rate cut reaching 70%, an increase of 12 percentage points from the previous day; The probability of a 50 basis point interest rate cut has dropped to 30%, a decrease of 12 percentage points from the previous day.
Summers believes that Federal Reserve officials will closely monitor the development of the economic outlook and adjust policies to adapt to the situation at that time. At present, the Federal Reserve will adjust interest rates at a rate of once per meeting (25 basis points). The expectations of the financial market for the Federal Reserve's future loose policies are a bit too high.
Michael Feroli, Chief US Economist at JPMorgan Chase, believes that both US employment and inflation are facing risks, and if one of these risks begins to manifest, the Federal Reserve should quickly reverse its policy direction. If we have to wait until inflation returns to 2% before taking action, it may take a long time. The Federal Reserve should lower interest rates by 50 basis points at its September meeting.
Some people have kicked the ball to next week's CPI data (which will be disclosed next Wednesday), believing that this is the last inflation report before the Federal Reserve's September decision, and its importance is self-evident. US interest rate strategist Ira Jersey stated that given the downward revision of non farm payroll data, the possibility of a 50 basis point rate cut cannot be completely ruled out at this time. So next week's CPI data will be the decisive factor.
As Seema Shah, Chief Strategist of Xin'an Global Investment, said, the Federal Reserve is in a dilemma. If it cuts interest rates by 50 basis points, it may reignite inflationary pressures; Or if only a 25 basis point interest rate cut is implemented, it may threaten an economic recession.