US Stocks Dip: Dow Down 200+ Points, Oil Rebounds 3%

• News
• 2024-06-13

**Three major stock indices dive at the end of the day, with the Nasdaq falling over 1%;

**Long-term U.S. Treasury yields rise, 2-year U.S. Treasury returns to 2%;

**Due to underperforming expectations, Advanced Micro Devices (AMD) plummets over 20%.

On Wednesday, U.S. stocks opened high and then fell, with a rebound being hindered as the market confidence was boosted by the dovish shift of the Bank of Japan, but tech stocks remained sluggish, dragging down the indices. By the close, the Dow Jones Industrial Average fell 234.21 points, or 0.60%, to 38,763.45, the Nasdaq fell 1.05% to 16,195.81, and the S&P 500 index fell 0.77% to 5,199.50. The VIX, a measure of market volatility, bottomed out and then rose by 0.5% to 27.85.

Star tech stocks showed mixed performance, with Apple up 1.2%, Amazon up 0.5%, Google up 0.1%, Microsoft down 0.3%, Meta down 1.0%, and Nvidia down 5.1%, leading the Philadelphia Semiconductor Index to completely give up a 3% gain.

Market Overview

Bank of Japan Deputy Governor Shinichi Uchida stated on Wednesday that the central bank will not raise interest rates during financial market instability, causing a short-term plunge in the yen's exchange rate and a temporary return of risk appetite. The Bank of Japan's surprise rate hike on July 31 led to a surge in the yen, with carry trade unwinding causing a global stock market crash.

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Charlie Ripley, Senior Investment Strategist at Allianz Global Investors, said: "Over the past few days, people have received some reassurances, and things have calmed down somewhat. However, there are still many unknowns, such as the degree of unwinding of yen carry trades and geopolitical headwinds."

Jamie Dimon, CEO of JPMorgan Chase, stated in a media interview that day that the market's plunge and partial recovery over the past week were equivalent to an "overreaction" by investors. He added: "The U.S. is still doing well."

Dimon said that despite recent turmoil and some negative data, his outlook on the potential for a recession is roughly the same as it was about six months ago, with the likelihood of a hard landing for the U.S. economy at 35% to 40%. He also continued to question whether inflation rates will soon decline enough to meet the Federal Reserve's 2% long-term target.Long-term U.S. Treasury yields have rebounded, with weak demand for 10-year Treasury auctions and corporate bond issuance pressures weighing on the market. The 2-year U.S. Treasury note has returned to 4%, and the benchmark 10-year U.S. Treasury note has risen to 3.97%. Federal funds rate futures indicate that the market continues to expect a 50 basis point rate cut by the Federal Reserve in September.

Former New York Fed Chairman Dudley has once again called for the Federal Reserve to immediately cut interest rates, and the market should prepare for greater volatility in both stock and bond markets. Dudley stated that the longer the Federal Reserve waits, the greater the potential for damage. If a recession becomes a reality, the Federal Reserve will need to adopt loose monetary policy and reduce interest rates to 3% or lower.

Investors have been concerned about the possibility of a U.S. economic recession, as well as weakening forecasts from some large U.S. companies. Peter Tuz, President of Chase Investment Counsel, said: "There are many things to worry about in the next two months or so, so I expect more volatility. I would not be surprised if there is a small sell-off again after a few days of rebound."

In terms of individual stocks, Advanced Micro Devices (AMD) plummeted by 20.1%, with adjusted gross margins for the quarter lower than expected. Disney fell by 4.5%, as the company predicted a slowdown in demand for its theme park business in the coming quarters. Airbnb dropped by more than 13%, as the travel rental company's profits in the second quarter fell more than expected due to soaring costs, and its third-quarter revenue guidance was also poor.

International oil prices have stabilized and rebounded, with U.S. crude oil inventories falling for the sixth consecutive week, boosting the market. The nearby WTI crude oil contract rose by 2.77%,报价 at $75.23 per barrel, while the nearby Brent crude oil contract rose by 2.42%,报价 at $78.33 per barrel.

International gold prices fluctuated and consolidated, with the COMEX gold futures contract for delivery in August on the New York Commodity Exchange rising by 0.06%,报价 at $2,390.50 per ounce.