In the early morning of the 21st Beijing time, US stocks closed down on Tuesday. The Federal Reserve will hold a two-day September monetary policy meeting starting Tuesday. The market generally expects the institution to raise interest rates by at least 75 basis points and is concerned that its aggressive monetary policy may trigger a recession. The U.S. bond sell-off has intensified, and yields have continued to rise. The Swedish central bank unexpectedly announced a 100 basis point rate hike on Tuesday.
Dow Jones fell 313.45 points, or 1.01%, to 30,706.23 points; the Nasdaq fell 109.97 points, or 0.95%, to 11,425.05 points; the S&P 500 fell 43.96 points, or 1.13%, to 3,855.93 points.
U.S. Treasury bonds were sold off due to the Fed's aggressive interest rate hike. On Tuesday, the U.S. 2-year Treasury yield climbed to its highest level since the second half of 2007. The 10-year Treasury bond yield rose to 3.593%, a record high since 2011. The yield on the 30-year U.S. Treasury bond rose to 3.574%, a record high since April 2014.
The stronger-than-expected inflation data released by the United States last week crushed speculation that inflationary pressures have peaked, and the sell-off of U.S. Treasury bonds has been almost uninterrupted since then. Federal Reserve Chairman Powell has made it clear that the Federal Reserve is committed to curbing inflation as soon as possible. This led to the two-year Treasury bonds, which are most sensitive to policy trends, leading the decline.
The Federal Open Market Committee (FOMC) will hold a September monetary policy meeting starting Tuesday. The market expects the bank to announce a rate hike of at least 0.75 percentage points on Wednesday.
Nevertheless, traders' debate over whether the Fed should raise interest rates by 75 basis points this week or 100 basis points is far from over.
Due to the hawkish comments issued by Fed Chairman Powell and the unexpectedly higher-than-expected U.S. consumer price index (CPI) in August, U.S. stock traders have accepted the Fed will adopt a larger rate hike until inflation cools down.
After a series of economic data including August CPI was released, the futures market's bet on the Fed's one-time interest rate hike of 100 basis points in September has heated up sharply, but after digesting emotions last weekend, the market finally "calmed".
Currently, the futures market believes that the probability of the Fed raising interest rates by 100 basis points on Thursday has dropped to 18%, and the remaining 82% possibility is a 75 basis points rate hike.
U.S. stock markets have suffered consecutive declines recently due to the Fed's expectations that it will raise interest rates aggressively.
Goldman Sachs analyst Dominic Wilson said that if the Fed needs to see a higher unemployment rate to be sure U.S. inflation will drop, the S&P 500 may fall to the 2900-3375-point range, and the 5-year U.S. Treasury yield may climb to the 4.5-5.4% range.
After the U.S. stock market close on Monday, Ford Motor Company suddenly announced that supply chain problems would cost the company an additional $1 billion in the third quarter, a news that frustrated market sentiment.
In terms of economic data, the total number of new homes started in the United States in August was 1.575 million, exceeding expectations; the total number of construction permits in August was 1.517 million, the lowest since August 2020, lower than expectations.
On Tuesday, the Swedish central bank announced that it had raised its benchmark interest rate by far exceeding market expectations to calm the rapidly rising inflation rate. The bank announced that it would raise the benchmark interest rate from 0.75% to 1.75%, with an increase of 100 basis points, exceeding the previous market expectations of 75 basis points, becoming the first G10 central bank to raise interest rates significantly this week.
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FORD warned after the close of Monday that additional costs of $1 billion are expected to be incurred in the third quarter due to inflation and supply chain issues. The company added that supply issues have caused shortages of parts, affecting the delivery of approximately 40,000-45,000 vehicles, mostly high-margin trucks and SUVs, which are not available to dealers.
Ford also pointed out that it still expects adjusted EBIT to be between $11.5 billion and $12.5 billion in 2022.
Many U.S. states require courts to resume antitrust lawsuits against Meta. Many U.S. states, led by New York, proposed Monday to the federal appeals court that antitrust lawsuits against Meta platform companies should be resumed because of the company's actions that caused continued damage, saying the lower court found that they had waited too long before filing the lawsuit was wrong.
Apple will increase the price of app and in-app purchases in some countries.Apple announced that the App Store will increase the prices of apps and in-app purchases from Chile, Egypt, Japan, Malaysia, Pakistan, Poland, South Korea, Sweden, Vietnam and all regions that use the euro as early as October 5.
In addition, well-known Apple analyst Ming-Chi Kuo once again exploded Apple's new mobile trends, releasing the news that Apple has asked Hon Hai to switch the production line of the iPhone 14 to the iPhone 14 Pro model. This is a reality, which is equivalent to increasing the shipment estimate of the iPhone 14 Pro in the fourth quarter by nearly 10%.
United Health Group's deal to acquire Change Healthcare, a medical information company, for $7.8 billion, was approved by the court. The deal was previously subjected to an antitrust lawsuit by the U.S. Department of Justice, with the core reason that United Health may control a large amount of health care data.
The Civil Aviation Administration and Boeing organized a special meeting on the 737MAX aircraft operation review (i.e. AEG review) in Zhoushan, Zhejiang, aiming to review the improved overall model training specifications of the 737 series. It is reported that after the questions raised at the meeting are resolved, the Civil Aviation Administration will release the second revision of the "Boeing 737 Series Aircraft Review Report", marking that China's civil aviation will resume the introduction of new 737MAX aircraft and will complete the entire process.
According to reports, Volkswagen Labor Commission Chairman Cavallo said in an interview that the company may sell more Porsche shares in the future. Cavallo said getting more funds will provide Volkswagen with additional flexibility to accelerate the transformation from internal combustion engines to electric vehicles.
The day before, Volkswagen announced that Porsche will be listed on the Frankfurt Stock Exchange in Germany on September 29, and will sell 12.5% of Porsche's total share capital, bringing the company a profit of 8.7 billion to 9.4 billion euros.
Porsche shares will be divided into 50% common stock and 50% non-voting preferred stock, and investors will subscribe to 25% of preferred stock.
New energy vehicle manufacturer Nikola announced the official launch of European Tre pure electric trucks.
Lilium announced a partnership with Palantir to launch an electric private jet.
FDA postpones discussions on giving Sabizabulin emergency use authorization to biopharmaceutical technology company Veru.
Valneva terminates delivery of COVID-19 vaccine to IDT Biologika.
Other markets, the price of West Texas Intermediate crude oil (WTI) futures for October delivery on the New York Mercantile Exchange fell $1.28, or 1.5%, to close at $84.45 per barrel. This is the lowest closing price of a near-month contract since September 8.
latest recent monthly contract - the November WTI contract fell $1.42, or 1.7%, closing at $83.94 per barrel.
2-month delivery gold futures price fell 0.4% to close at $1,671.10 per ounce.
