U.S. stocks fell hard! The NASDAQ fell more than 4%, and the market value of the seven technology giants evaporated by 7 trillion yuan in 3 days! Chinese stocks and bitcoin also plummeted, what happened?

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On May 9, local time, the three major US stock indexes fell across the board. By the close, the Dow was down 1.99 percent, the NASDAQ was down 4.29 percent and the S&P 500 was down 3.20 percent.

After three consecutive days of gains in early May, the major U.S. stock indexes have experienced three consecutive declines and have continued to refresh recent lows. In the past three trading days, the market value of the seven major U.S. technology giants has evaporated by more than $1 trillion.

The tech giants' market capitalizations have evaporated by more than a trillion dollars

On the same day, the three major US stock indexes all fell more than 1% at the opening, and the intraday decline was further expanded.

As of the close, the Dow Jones closed at 32245.70 points, down 653.67 points, or 1.99 percent; the NASDAQ composite closed at 11,623.25 points, or 4.29 percent, its lowest closing price since November 10, 2020; and the S&P 500 fell below 4,000 points, or 3.2 percent, at 3.2 percent, the lowest since March 2021.

On the surface, the consumer sector performed relatively well, with 3M companies, Walmart up more than 1%, Home Depot up 0.92%; food companies rose in the front, Campbell Soup rose 3.46%, General Mill, Tyson Foods rose more than 2%, Kraft Heinz rose 1.38%.

Big tech stocks fell, with Tesla and Nvidia falling more than 9 percent, Amazon down 5.21 percent, Apple, Microsoft, Facebook parent company Meta down more than 3 percent, and Google down 2.8 percent. In the past three trading days, the market value of the seven technology giants has evaporated by more than $1 trillion (equivalent to 7 trillion yuan).

The NASDAQ China Golden Dragon Index fell 7.79%; Xiaopeng Automobile fell 10.05%, Weilai and Ideal Automobile fell more than 9%, JD.com, Pinduoduo, Baidu fell more than 8%, Alibaba fell 5.79%, and NetEase fell 4.4%.

In commodity markets, gold futures recorded a decline, with the most actively traded June gold futures on the New York Mercantile Exchange gold futures market down $24.2 from the previous session, or 1.29% at $1,858.6 an ounce.

The decline in international oil prices was even more pronounced, with light crude futures for June delivery on the New York Mercantile Exchange falling $6.68, or 6.09%, to close at $103.09 a barrel, and Brent crude futures for July delivery falling $6.45, or 5.74%, to close at $105.94 a barrel. Energy sector stocks fell sharply, with Western Oil down 10.93 percent, ConocoPhillips down 9.74 percent, ExxonMobil down 7.89 percent, Chevron down 6.7 percent and Shell down 5.81 percent.

U.S. 10-year Treasury yields broke 3.2 percent intraday, their highest since November 2018; they retreated in late trading, but remained above 3 percent.

Jeff Kilburg, chief investment officer at Sanctuary Wealth, said the current market performance was a major asset repricing and a serious imbalance, spurred and driven by Fed policy. The only way for the stock market to bottom out in the short term and for the market to recover is whether the Fed has the ability to use the tools in its toolbox to stabilize interest rates. The US 10-year Yield needs to return below 3%.

The DBS report notes that monetary tightening policies and seasonal economic slowdowns may have a short-term impact on investment sentiment, but investors in the medium to long term should seize the opportunity for valuation corrections. It is recommended to increase holdings in industries with long-term growth prospects, from which to select high-quality enterprises with stable profit growth, stable cash flow and low leverage; increase their holdings of dividend-bearing assets to combat inflation and the risk of negative real interest rates formed by it.

Bitcoin plunged more than 10% at one point

In response to inflation, the Federal Reserve announced its decision on May 4 to raise the federal funds rate to the 0.75%-1.00% range, the first sharp rate hike of 50 basis points since 2000; it began to shrink its balance sheet at a pace of $47.5 billion per month in June, and gradually raised the ceiling to $95 billion per month within three months. U.S. stocks recorded a sharp rally on the day after Fed Chairman Jerome Powell said he would not consider raising interest rates by 75 basis points, but since then investors have begun to worry that the Fed may be difficult to control inflation while avoiding a recession, and the decline in U.S. stocks has continued to this day.

Kristina Hooper, chief global market strategist at Invesco, believes that the market is digesting the Fed's monetary policy, which is beginning to return to normalcy, and aggressive interest rate hikes will allow the recession prospect to emerge, especially considering high inflation, the situation in Ukraine and the chaos in the supply chain associated with the epidemic.

On the 9th, a survey released by the Federal Reserve Bank of New York showed that the inflation expectations of US consumers for the coming year fell in April, but the perception of medium-term inflation and household spending expectations climbed to a record high. The survey showed that the median expectations of U.S. consumers for the next year's inflation level fell by 0.3 percentage points to 6.3 percent in April, while the three-year inflation forecast rose 0.2 percentage points to 3.9 percent.

Atlanta Fed President Raphael Bostic said the Fed could raise rates by 50 basis points each in the next two or three meetings before assessing the economy's and inflation response to decide whether further rate hikes are needed. Bostic believes the 50 basis-point rate hike approved by the Fed last week "is already a pretty radical move" that doesn't require a more radical move. Some analysts pointed out that this also seems to rule out a larger 75 basis point hike.

Bostic said: "I think we can maintain this pace and pace and really see how the market develops... We're going to raise rates a few times, maybe twice, maybe three times, and see how the economy reacts, see if inflation continues to approach our 2% target, and then we can pause for a moment and see how things go. ”

Bitcoin also showed weakness on the day, plunging more than 10% intraday below $31,000. U.S. Treasury Secretary Janet Yellen is scheduled to address the Senate Banking Committee on the 10th, and in her prepared remarks, she talked about digital assets, new products and technologies that bring new opportunities in terms of increasing innovation and efficiency, but may exacerbate financial risks. The Financial Stability Regulatory Commission (FSOC) is seeking to identify the risks that digital assets will pose.

Regarding the situation in financial markets, Yellen said that the future will not surprise the market for continued volatility during the summer. While valuations of some assets remain high compared to history, the U.S. financial system is still operating in a relatively orderly and stable manner. The situation in Ukraine and China's COVID-19 policy have made commodities more expensive.

Biden signed a democratic defense lend-lease bill for Ukraine

In response to the situation in Ukraine, US President Joe Biden signed a democratic defense lend-lease bill for Ukraine. According to CCTV News, the bill would greatly simplify the process for the United States to provide military assistance to Ukraine and other necessary resources.

Under the terms of the bill, Ukraine will be able to request arms and armaments requirements from the United States and its allies, while the U.S. government will use the military lend-lease program to accelerate the transfer of weapons, military equipment, medicines, food, etc. to Ukraine. Ukraine is required to pay lease fees to the United States as stipulated in the bill, but its current ability to pay is in doubt, and it is expected that the payment will be postponed to a later date.

The bill aims to revive a World War II-era program that allows the administration to lend or lease military equipment to U.S. allies. The U.S. House and Senate previously voted to pass the bill in April.

In addition, U.S. Defense Department spokesman John Kirby said at the briefing that there are still $100 million left in the "presidential appropriation power"; plus the $150 million announced on the 6th to aid Ukraine, the United States can continue to provide military assistance to Ukraine through this funding channel until "about the third week of this month." The Biden administration has asked Congress to pass a $33 billion supplementary aid program to continue providing humanitarian and military aid to Ukraine.

Editor: Ye Shujun

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