2024-04-10 21:51:28
U.S. Stock Diary｜Inflation has been higher than expected for three consecutive months, and the Dow fell more than 400 points (Spencer Platt via Getty Images)
U.S. stocks fell across the board, with the Dow Jones Industrial Average falling more than 400 points. U.S. inflation data in March were stronger than expected. Wall Street generally believes that the Federal Reserve will not cut interest rates for the first time in June, and the number of interest rate cuts throughout the year has also been reduced. Goldman Sachs latest predicts two interest rate cuts throughout the year, and Barclays expects to cut interest rates throughout the year. Rest once. U.S. Treasury bond interest rates rose sharply, with the ten-year bond interest rate rising by 19.4 points and the two-year bond interest rate by 22.6 points. Technology stocks were soft and chip stocks generally fell, but Nvidia still bucked the trend and rose nearly 2%.
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Market conditions on April 10 (Wednesday)
l The Dow Jones index fell 422.16 points, or 1.09%, to 38,461.51 points.
l The S&P 500 index fell 49.27 points, or 0.95%, to 5,160.64 points.
l The Nasdaq index fell 136.28 points, or 0.84%, to 16,170.36 points.
l New York oil futures for April delivery closed at US$86.21 a barrel, up US$0.98 or 1.15%.
l New York April gold futures closed at $2,352.40 an ounce, down $10 or 0.42%.
l The U.S. 10-year Treasury bond yield closed at 4.560 percent, up 19.4 points.
Inflation was higher than expected, leading to market expectations for a further slowdown in interest rate cuts. According to the CME FedWatch tool, federal funds futures trading data currently show that the probability of the Federal Reserve cutting interest rates at the June meeting is only 20%, and the first rate cut in July is only 34%. Traders are now betting that the first rate cut could come at the central bank’s September meeting.
U.S. Treasury bond interest rates rose sharply after the release of the inflation data. The ten-year Treasury bond interest rate rose to 4.56%, a sharp increase of 19.4 points to the level at the end of October last year. The two-year government bond interest rate rose to 4.973%, a sharp increase of 22.6 points.
The postponement of interest rate cut expectations and the rise in government bond interest rates have worsened market sentiment. Chip stocks fell significantly, with AMD, Qualcomm, Texas Instruments and Intel falling 2-3%. However, Nvidia also rose by nearly 2%.
Real estate stocks and banking stocks generally fell, while energy stocks benefited from rising oil prices and bucked the trend.
Many Wall Street banks have adjusted their expectations for interest rate trends. A team of Goldman Sachs economists led by Jan Hatzius, who late last year expected the Fed to cut interest rates five times starting in March 2024, now expects the Fed to cut interest rates only in July and November this year due to stubbornly high inflation data. Interest rates were cut twice.
Seema Shah, chief global strategist at Principal Asset Management, said that when U.S. inflation data strengthened for the third consecutive month, it showed that the process of declining inflation encountered considerable obstacles. Even if inflation can drop to a more reassuring level next month, judging from the cautious remarks of Federal Reserve officials, it is unlikely to cut interest rates in July, and then it is likely to be affected by the U.S. election. decision.
Barclays economists have lowered the number of rate cuts expected by the Federal Reserve this year to one, which may occur in September or December. “We no longer believe the Fed will feel comfortable cutting interest rates every few meetings starting in June.”
The fear index VIX once rose to 16.43, an increase of more than 9% from Tuesday. At the same time, the VIX index has touched above 16 during the trading session for the fifth consecutive day. The last time it briefly touched this level was more than four weeks ago, on March 11. The last time the VIX was at levels higher than today was in early November and late October last year, when the stock market was in the midst of a rebound.
According to the minutes of the Federal Reserve meeting, almost all officials believe that it is appropriate to cut interest rates this year. They believe that there is uncertainty about the stubbornness of high inflation in the United States and hope that their confidence in “inflation falling back toward the 2% target” can be increased. Some officials believe financial conditions pose upside risks to U.S. inflation.
In terms of data, the U.S. Department of Labor announced that driven by rising energy prices, CPI rose by 0.4% month-on-month and 3.5% year-on-year in March, 0.1% higher than expected. The core CPI, which excludes volatile food and energy prices, rose 0.4% month-on-month and 3.8% higher than the same period last year. Both figures were also 0.1% higher than expected.
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