Reporter of the Economic Business: Li Menglin Reporter of the Economic Business Business: Lan Suying
Affected by the uncertainty of corporate performance in the financial report quarter and the monetary policy of the Federal Reserve , the U.S. stock closed on October 10, and the three major stock indexes closed down collectively for the fourth consecutive trading day, and Nasdaq fell to a low in the past two years.
The shadow of the US economic recession continues to shroud. New Nobel Prize in Economics winners Bernanke , JPMorgan CEO O Jamie Damon , Ark Invest CEO "Mistress Mu" and other important figures have warned about the risks faced by the financial market and economic environment, and two Federal Reserve officials also said that hikes should be more cautious in the future.
Specifically, on October 10, the Nasdaq closed down 1.04% to 10,542.10 points, hitting a new closing low since July 28, 2020. S&P 500 closed down 0.75% at 3612.39 points, while the Dow Jones Industrial Average closed down 93.91 points, or 0.32%, to 29,202.88 points. The Dow and S&P both hit new closes since September 30.
Image source: CNBC website screenshot
chip stocks and auto stocks lead the decline. Philadelphia Semiconductor Index closed down 3.45%, closing below 2300 points for the first time since November 3, 2020. The semiconductor industry ETF SOXX closed down 3.4%, also hitting a new low in nearly two years.
Image source: Futu Niu Niu Screenshot
Due to the expected oversupply of the automobile industry, UBS reduced the rating of Ford Auto (F, stock price of US$11.36, market value of US$45.654 billion) from neutral to sell, Ford closed down 6.9% on the 10th; General Motors (GM, stock price of US$32.29, market value of US$47.08 billion) was also downgraded by UBS, from buy to neutral, and the company's stock price closed down about 4%; electric car company Rivian (RIVN, stock price of US$31.48, market value of US$28.842 billion) closed down 7.3%. On the news, the company announced that it would recall almost all cars for sale due to the safety risks of loose parts.
Since the beginning of this year, US stocks have continued to fall. As of the close of the 10th, the S&P 500 has fallen 24.69%. JPMorgan Chase CEO Jamie Dimon warned on the 10th that the S&P 500 may "relax 20%" from the current level, and the next 20% will be much more painful than the first 20%.
Image source: Google Finance
Dimon believes that as the out-of-control inflation and interest rate rise in the United States exceed expectations, and the impact of the situation in Ukraine is still fermenting, these factors are "very, very serious things", which may lead to the United States and the world in recession. He said that Europe has actually fallen into a recession, which may drag the United States into some degree of recession after 6 to 9 months.
Former Fed Chairman Bernanke made his first statement after winning this year's Nobel Prize in Economics with two other economists, calling on policy makers to pay close attention to the deterioration of financial market conditions.
As a famous scholar studying Great Depression , Bernanke served as chairman of the Federal Reserve from 2006 to 2014, and led the Federal Reserve to respond to the financial crisis, avoiding further deterioration of the US and even the global economy. He said that although the stability of the US financial system currently faces some risks, it is not as severe as 14 years ago.
Bernanke said that the Fed still faces huge challenges in achieving a "soft landing" that controls inflation while avoiding recession. With the slowdown in economic activity after the Fed raises interest rates, the Fed needs to weigh the dual goals of stabilizing prices and achieving maximum employment when formulating monetary policy.
This week, the United States will release a series of latest inflation data, including the producer price index (PPI, expected to be released on the 12th) and the consumer price index (CPI, expected to be released on the 13th).
Previously released CPI growth in August was as high as 8.3% year-on-year. The non-farm employment data released last week showed that the labor market was still strong. The market expects high inflation data to provide reasons for the Federal Reserve to continue to raise interest rates sharply. According to the latest data from FedWatch, traders bet that the Fed is raising interest rates by 75 basis points at its November policy meeting is as high as 78.4%.
Ark Investment CEO Casey Wood (also known as "Miss Wood") said in an open letter to the Federal Reserve on the 10th that the above indicators are lagging, and the Federal Reserve's continued sharp interest rate hikes may be a mistake."In our opinion, the two lagging indicators of inflation and employment have been sending contradictory signals that have forced us to question the high interest rates the Fed is calling for," the open letter said.
MuToujie believes that the Federal Reserve should pay more attention to leading indicators such as commodity prices. In addition to some food and energy that have been impacted by the situation in Russia and Ukraine, the prices of most bulk commodities have peaked and have seen a year-on-year decline. Both retailers and used car industries are facing severe pressure to destock, and commodity prices are expected to fall further.
The Fed has raised interest rates by 75 basis points three times in a row and is expected to raise interest rates by 75 basis points for the fourth time. Sister Mu said that this may have caused shocks to the US and even the world economy, and the risk of deflation and collapse increased.
As Mutoujie questioned, the latest speeches of two Federal Reserve officials also weakened in their tone. On the 10th, the second-in-commander of the Federal Reserve and vice chairman of the Federal Reserve, Brainard , said that existing interest rate hikes and expectations for future interest rate hikes may slow down the economy in some ways that cannot be observed yet, which was interpreted by the media as the possibility of the Federal Reserve's cautious interest rate hikes.
Earlier on the same day, the Federal Reserve "dove" and Chicago Fed Chairman Evans said that according to his outlook on the economic outlook, the Federal Reserve should suspend interest rates and evaluate the effectiveness of interest rates after raising the policy rate to slightly above 4.5% in March next year.
Daily Economic News
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