US stocks suffered another heavy hit!
On October 24, the U.S. stock market suffered another bloodbath. The Dow Jones Industrial Average fell 608 points, or 2.41%, a three-month low; the S&P 500 index fell 3.09%, a five-month low; the Nasdaq fell 4.43%. , the largest single-day decline since August 2011. Overall, the value of the U.S. stock market evaporated by 8.75 trillion in one day.
From the market perspective, U.S. technology stocks suffered a plunge, with Apple closing down 3.43%, Amazon closing down 5.91%, Netflix closing down 9.4%, Tesla closing down 1.92%, Facebook closing down 5.41%, and the Nasdaq closing price It fell 11.48% from the high on August 29 and entered a technical correction range. Chinese concept stocks also suffered a collective setback. Alibaba closed down 4.8%, JD.com closed down 6.33%, and Baidu closed down 4.63%.
Faced with the continued correction of the US stock market, the number of bear market theories in the US stock market has gradually increased. The latest research report from the Bank of America Merrill Lynch quantitative analysis team pointed out that 14 of the 19 bear market indicators have been triggered, that is, the warning line has reached 74%, which is only one step away from the warning line (80%) that predicts the arrival of a bear market.
Globally, global stock markets are in panic:
On Wednesday, the pan-European Stoxx 600 index fell 0.2%, setting a 22-month low and falling for the sixth consecutive trading day. Germany's DAX index closed down 0.73%, hitting a new low in the past two years.
The Asia-Pacific market, which has just opened, is also in a general downward trend. As of the time of publication by Brokerage China, the Nikkei 225 Index fell more than 3%; the South Korean Composite Index fell more than 2%, hitting a new low since January last year.
The Australian stock market is also in a general downward trend. As of the time of publication by Brokerage China, the Australian S&P 200 has fallen by more than 2%, and the New Zealand 50 has fallen by more than 1%.
Hong Kong's Hang Seng Index opened 1.9% lower, falling below 25,000 points; Tencent, Xiaomi , and Evergrande opened lower by 3.3%, 2.1%, and 3.5% respectively.
The three major A-share indexes collectively opened sharply lower, with the Shanghai Composite Index falling 2.4%, the Shenzhen Component Index falling 2.79%, and the GEM falling 3.02%.
U.S. stocks encountered Black Wednesday again, triggering 14 bear market indicators
On October 24, U.S. stocks encountered Black Wednesday again, especially near the end of the trading day. The three major U.S. stock indexes accelerated their decline. The Dow and S&P both gave up all their gains during the year, and the Nasdaq even more It was the largest one-day drop in seven years.
The Dow Jones Industrial Average closed down 608.01 points, or 2.41%, at 24583.42 points, a three-month low, erasing all gains for the year.
The S&P 500 index closed down 84.59 points, or 3.09%, to 2656.10 points, hitting a five-month low, erasing all gains for the year.
The Nasdaq closed down 329.14 points, or 4.43%, the largest single-day decline since August 2011, at 7108.40 points.
Under the influence of the sharp decline in U.S. stocks, the Volatility Index (VIX), which measures market panic, rose by more than 20%, hitting the highest value in more than half a year.
On October 10, which was also Wednesday, the U.S. stock market suffered a bloodbath. The Dow Jones Industrial Average plunged more than 800 points, down 3.15%, the largest single-day drop in eight months; the Nasdaq plunged 4.08%, hitting a new low in more than three months; the S&P plunged 3.27%, its longest losing streak since November 2016. , it is also the longest losing streak since Trump was elected president.
Faced with the continued correction of the US stock market, the number of bear market theories in the US stock market has gradually increased. The latest research report from the quantitative analysis team of Bank of America Merrill Lynch pointed out that its U.S. stock bull and bear indicator shows that U.S. stocks may only have 21 months left before peaking and turning bearish. The
research report stated that among Bank of America Merrill Lynch's 19 U.S. stock bear market indicators, 11 were triggered in January this year. Violent turbulence in global stock markets ensued in early February, and the 13th indicator was triggered in May. Now, in early October, U.S. stocks are The 14th indicator of the drop was also activated. Indicators that have sounded the alarm include the Federal Reserve interest rate being higher than 0.75% (currently 2-2.25%), the S&P 500 return in the past 24 months being greater than 30% (currently 36%), and the average performance of companies with an S&P rating below B exceeding a rating of B+ The above companies etc.
Technology stocks plunged U.S. stocks again, and Chinese concept stocks fell broadly.
U.S. stocks fell sharply. Technology stocks once again acted as the main culprits of the decline. The five major technology stocks FAANG stocks collectively fell sharply, and all fell by more than 3%. The market value evaporated by more than one trillion in one day: Apple closed down 3.43%, Amazon closed down 5.91%, Netflix closed down 9.4%, Facebook closed down 5.41%, Google fell 4.8%.
Other U.S. technology stocks also suffered heavy losses. Nvidia closed down 9.79%, AMD closed down 9.17%, Micron Technology closed down 8.4%, NXP closed down 8.35%, Qualcomm closed down 5.66%, Microsoft closed down. 5.35%, Intel closed down 4.67%, Spotify closed down 4.52%, Broadcom closed down 4.51%, Twitter closed down 4.28%, US-listed TSMC closed down 4%, IBM closed down 3.05%, Oracle closed down 2.56% , Tesla closed down 1.92%.
According to Reuters, Refinitiv data showed that an analysis of 1,701 technology companies with a global market value of more than US$100 million each showed that their combined market value fell from US$11.64 trillion on October 1 to approximately US$10.58 trillion on October 23. , that is, the market value of global technology stocks has evaporated by approximately US$1 trillion this month.
In addition, U.S. telecommunications giant AT;;;;;;;;T plunged 8.06% after releasing its quarterly financial report, dragging down communications stocks. Similarly, telecommunications stocks listed on the U.S. stock market are also in general decline.
It is worth noting that Chinese concept stocks generally fell, with Alibaba closing down 4.8%, JD.com closing down 6.33%, and Baidu closing down 4.63%. Acorn International closed down 28.04%, NIO closed down 9.4%, Huya Live closed down 8.62%, NetEase closed down 8.5%, Bilibili closed down 7.56%, Qutoutiao closed down 6.68%, Weibo closed down fell 6.53%, while Pinduoduo closed down 6.43%.
The global stock market has entered a moment of panic
With the continued correction of US stocks, the global stock market has entered a moment of panic.
In addition to the decline in US stocks,
American stock markets, Brazil BOVESPA, Canada's P/TSX, Mexico BOLSA are also in decline.
The same is true for European stock markets. On October 24, most of the three major European stock indexes closed down. The UK's FTSE 100 index closed up 0.11% at 6962.98 points; France's CAC40 index closed down 0.29% at 4953.09 points; Germany's DAX index closed down 0.73% at 11191.63 points, hitting a new low in the past two years. Deutsche Bank shares closed at a record low.
Six major factors dragged down U.S. stocks
1. Pressure on the Federal Reserve to raise interest rates
The minutes of the Federal Reserve meeting released by the Federal Reserve last week showed that it gradually raised interest rates at a steady pace. Fed officials believe that continuing to gradually raise interest rates is consistent with the current economic situation and "is likely to be sustainable." The Federal Reserve announced last month that it would raise the federal funds rate target range by 25 basis points to a level of 2% to 2.25%. This is the third time the Federal Reserve has raised interest rates this year. The market generally expects the Federal Reserve to raise interest rates for the fourth time this year in December. The research report of
International Investment Bank pointed out that we must pay attention to the Federal Reserve now. The Federal Reserve has raised its benchmark interest rate three times this year and is expected to raise interest rates once in December. Despite criticism from President Trump, the Federal Reserve is determined to stay ahead of inflation and has signaled a willingness to continue raising interest rates to keep inflation in check. However, rising interest rates will affect consumers' willingness to borrow. Bank stocks have been hammered this year on worries about lending. New home sales fell 5.5% in September to a two-year low and auto dealers reported lower sales.
2. Risk aversion in the global market has increased sharply
The city's stock market is currently in turmoil, and funds are pouring into safe-haven assets such as the Japanese yen and gold. At present, geopolitical tensions in the Middle East are tense, Britain's "Brexit" negotiations are at an impasse, and the Italian government debt crisis is plaguing the global market, and investor risk aversion is soaring.
Affected by investors' avoidance of risks, international oil prices fell by more than 4% on the 23rd. As of the close of the day, the price of light crude oil futures for December delivery on the New York Mercantile Exchange closed at $66.43 per barrel, a decrease of 4.22%.
CICC said that during a sharp correction in the U.S. stock market, it is usually accompanied by a sharp deterioration in risk appetite globally, which is manifested in a sharp decline in all risk assets and a general rise in safe-haven assets. Judging from historical experience, if this happens, global risk assets, especially some emerging markets with open capital, may be affected by the deterioration of risk appetite. Therefore, simply rotating between different markets may not be possible at this time. It has a very good hedging effect; in contrast, traditional safe-haven assets such as gold, Japanese yen, and government bonds may be more effective in hedging systemic risks.
3. The U.S. mid-term elections enter the sprint stage
Since Trump came to power, the tax reform and other policies introduced by the White House have stimulated the growth of the U.S. economy and supported the "Trump market" in the stock market. In the context of current high valuations of U.S. stocks and increased volatility, the impact of the election results on economic policy has become the focus of the market.
Wells Fargo Bank statistics found that from historical experience, the S&P 500 Index is likely to adjust during the election sprint. Once the midterm election results are confirmed and political uncertainty is eliminated, the S&P 500 Index will perform better again. This has little to do with the winning or losing of different political parties. The key is the elimination of uncertainty and a shift in focus, allowing the market to return to focusing on fundamentals.
A CICC research report pointed out that for the U.S. stock market, one of the most important events currently may be the approach of the U.S. midterm elections on November 6, and the policy variables that may be derived deserve special attention. In a sense, the recent increase in policy uncertainty does not rule out a certain correlation with the approach of the midterm elections.
4. Profit margins are at risk
The international investment bank research report pointed out that from the financial report of the entire year, the third quarter financial results reported by the company were very good. But this time, executives have been talking about the challenges they face, including rising production and material costs and relatively high tariffs. Some of these executives said their profit margins may be squeezed by these factors and they may have to pass on cost increases to customers if they haven't already done so.
5. Institutional investor confidence index plummeted
Top Down Charts columnist Callum Thomas said that compared with global stock indexes that continue to hit new highs, the institutional investor confidence index hit a new low in the past five years in 2018. In the past year, market giants with huge amounts of money have also shown a more prudent attitude towards asset selection.
The recent rapid decline in the investor confidence index shows that institutional investors have slowed down their entry into the market. Callum Thomas believes that the main reasons for the decline in investor confidence are: the valuation of the US market reaching a relatively high point, the Federal Reserve's interest rate hike, European market pressure, trade disputes, political crisis and economic downside risks. At the same time, Europe is facing multiple event factors, and reduced income in North America is also a factor that worries the market.
6. U.S. stock profit-taking flight
CICC believes that the long-term rise in U.S. stocks has accumulated more profit-taking, and the asset allocation of overseas investors, U.S. residents themselves, and the leverage implicit in financing accounts are all at a Historical highs. Therefore, if the sharp decline continues and triggers panic, further selling pressure cannot be ruled out, which is the so-called "risk brought by the decline itself."
This article comes from the brokerage China
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