The surge in U.S. Treasury yields put pressure on U.S. stocks, while geopolitical tensions and poor financial forecasts from Wal-Mart and Home Depot also weighed on investor sentiment. Major U.S. stock indexes opened lower on Tuesday (21st).
before the deadline,Dow Jones Industrial Averagefell nearly 300 points or nearly 0.9%,Nasdaq Composite Indexfell more than 100 points or nearly 1%,S&P 500 Indexfell nearly 0.9%,Philadelphia SemiconductorThe index fell 0.5%.
After central bankers reiterated that they will continue to fight inflation, global stock markets have failed to start the year. Taking into account the factor of raising interest rates again by 3 yards (75 basis points).
Traders also reduced bets on a first U.S. rate cut, with the swap options market now pricing in a 20 basis point cut by the end of the year, compared with a 50 basis point cut earlier this month.
The Fed will announce the minutes of its February monetary policy meeting in the early hours of Taiwan time. Michael Kramer, founder of Mott Capital Management, believes that the minutes may show that interest rates will rise sharply. Kramer said that this week’s Fed meeting minutes may bring some surprises to investors, but more importantly, the content may clarify the Fed’s plan to raise interest rates. The chairman of the Fed has said at the Federal Open Market Committee (FOMC) that the minutes of the meeting will reveal when the Fed decides to suspend the discussion of the rate hike cycle.
Morgan Stanley equity analyst Wilson (Mike Wilson) said that the expensive US stock market is sending a crucial warning signal, and economic data ruled out the possibility of the Fed turning to the loose monetary policy expected by the market;S&P 500 IndexIt may fall by about 26% to around 3,000 points. Strategists such as Wilson say the stock market risk premium has entered a level known as the “death zone,” making the risk-reward ratio very low.
Separately, the US Treasury hit its borrowing limit of US$31.4 trillion last month. Unless Congress raises or suspends that cap, the U.S. government could start defaulting on the bonds that underpin the global financial system. Investors have begun reducing their holdings of U.S. Treasuries, and some bond managers have begun to adjust their short-term exposure to U.S. government debt to avoid losses when the government may run out of debt.
As of 22:00 on Monday (21st) Taipei time:
Focus stocks:
Walmart (WMT-US) fell 1.17% in early trade to $144.72 per share
Wal-Mart reported $164.05 billion in revenue last quarter, higher than market expectations of $159.757 billion; net profit of $6.275 billion, higher than expected $4.1 billion; adjusted earnings per share of $1.71, better than expected $1.52 . Looking ahead, the company forecasts adjusted earnings per share in the range of $1.25 to $1.30 for the first quarter of fiscal 2024.
The Home Depot (HD-US) fell 3.92% in early trade to $305.48 per share
Home Depot’s revenue in the last quarter increased by 0.3% to US$35.83 billion, slightly lower than market expectations of US$35.97 billion; earnings per share reported US$3.3, higher than market expectations of US$3.28; net profit increased by 0.3% to $3.36 billion. Looking ahead, Home Depot expects fiscal year 2023 sales to be roughly flat, with a profit margin of approximately 14.5%, and a mid-single-digit decline in diluted earnings per share.
Faraday Future (FFIE-US) was up 6.81% in early trade to $0.6271 per share
Faraday Future, an American electric vehicle start-up company, rose more than 7% before the market. The company announced on its official website that it will start production of its flagship at the FF ieFactory California plant in California on March 30, 2023 after investors’ funds are in place as scheduled. Electric vehicle product FF 91 Futurist. According to the scheduled plan, the first batch of vehicles manufactured by the plant will roll off the production line in early April and be delivered to the first batch of customers before the end of April.
Today’s key economic data:
- U.S. February manufacturing PMI initial value reported 47.8, expected 47.1, previous value 46.9
- The initial value of the U.S. service industry PMI in February was 50.5, expected 47.2, and the previous value was 46.8
- U.S. composite PMI initial value reported at 50.2 in February, expected 47.5, previous value 46.8
Wall Street Analysis:
JP Morgan strategists said that investors in US stocks who are too optimistic about the economic outlook will be disappointed. The highest point of US stocks in the first quarter may be the highest point of the US stock benchmark S&P 500 this year. “Historically, U.S. stocks don’t typically bottom until the Fed cuts rates further, and not only that, but the Five have never seen a bottom in U.S. stocks even before the Fed stops raising rates,” the strategists said.
Fahad Kamal, chief investment officer of SG Kleinwort Hambros Bank, said: “The Fed has not sent a signal that they will take any action different from the past, but the market did not believe them earlier. The market was too complacent at the beginning of this year, thinking that there will be a turning point. Now, however, the data is stronger, the Fed hasn’t changed their rhetoric, and the stock market has reversed somewhat after the earlier rally.”
