On August 30, local time, the three major stock indexes of the US stock market closed up collectively, all recording the fourth consecutive trading day of gains, and the S&P 500 index stood at the 4500 mark. By the close, the Dow was up 0.11%, the S&P 500 was up 0.38%, and the NASDAQ was up 0.54%.
On the day, investors welcomed some weak economic data, and the urgency of the Fed rate hike eased further. The data showed that the Bureau of Economic Analysis revised the annualized rate of real GDP for the second quarter to 2.1% from 2.4%, compared with expectations of 2.4%. The PCE price index rose 2.5%, down 0.1 percentage points, while excluding food and energy prices, the PCE price index rose 3.7%, down 0.1 percentage points. In addition, the number of new ADP jobs in the United States recorded 177,000 in August, the smallest increase in five months, and less than the expected 195,000, a sharp decline of 45% month-on-month. After the data was released, the dollar index plunged more than 50 points in the short term.
Sonu Varghese, global macro strategist at Carson Group, said the rally in U.S. stocks can be attributed to a "bad news is good news" type of environment, which is often the case when investors are worried about interest rates and Fed policy. Any weakness in economic data would reduce upward pressure on Treasury yields, which would be positive for equities.
In terms of other hot news, Baidu Wenxin took the lead in opening up to the whole society.
Wen Xin's words are open to the whole society
In the early morning of August 31, Baidu officially announced that Wen Xin's words were open to the whole society.
Users can download the "Wen Xin Yiyan APP" in the app store or log in to the "Wen Xin Yiyan official website" experience. It is reported that Baidu will also open a batch of newly reconstructed AI native applications, allowing users to fully experience the four core capabilities of generative AI's understanding, generation, logic and memory.
On Wednesday, against the backdrop of a general decline in Chinese concept stocks, Baidu U.S. stocks rose sharply intraday, closing up 3.11%.
The three major U.S. stock indexes rose for four consecutive days
On August 30, local time, the three major stock indexes of the US stock market closed up collectively, all recording the fourth consecutive trading day of gains, and the S&P 500 index stood at the 4500 mark. By the close, the Dow was up 0.11% at 34,890.24, the S&P 500 was up 0.38% at 4,514.87 and the NASDAQ was up 0.54% at 14,019.31.
Although U.S. stocks closed higher on Wednesday, they are still likely to record losses in August. As of Wednesday's close in August, the Dow fell 1.88%, the S&P 500 fell 1.61%, and the NASDAQ lost 2.28%.
In terms of sectors, the 11 sectors of the S&P 500 Index rose nine times and fell twice. The technology and energy sectors led the gains by 0.83% and 0.51%, respectively, while the utilities and healthcare sectors fell by 0.43% and 0.03%, respectively.
Most of the big technology stocks rose, Apple rose nearly 2%, Netflix rose more than 1%, Nvidia, Google A rose nearly 1%, Microsoft, Amazon rose slightly; Facebook's parent company Meta fell nearly 1%, and Tesla fell slightly.
Apple rose 1.92% as it tested the steel chassis that used 3D printing technology to produce its smartwatches. By using this technology, producers do not need to cut large pieces of metal into the shape of the product. People familiar with the matter say this will reduce the time it takes to manufacture equipment, while also reducing the use of materials, thereby protecting the environment.
Nvidia shares continued to hit a new closing high after Google Cloud and Nvidia announced an expanded partnership to advance AI computing, software and services. Google's new supercomputer A3 GPU with NVIDIA H100 GPU will be widely available in September.
Google announced Wednesday that it will hold its fall launch on October 4 local time in New York City. At this product launch, it is likely to see the next generation of Pixel phones and the latest watches. Google is expected to launch the Pixel 8 and Pixel 8 Pro, which will inherit last year's Pixel 7 and Pixel 7 Pro.
Vietnamese electric car maker VinFast plunged another 10.77 percent on Wednesday after plunging nearly 44 percent on Tuesday, with a market value of less than $100 billion, less than three days from its high.
HP closed down 6.65% after reporting earnings as the company's fiscal third-quarter revenue fell short of analysts' expectations and lowered its cash flow and EPS profit guidance for the remaining fiscal year.
Most of the popular Chinese concept stocks fell, with the Nasdaq China Golden Dragon Index falling by 0.15%, Vipshop falling by more than 3%, Li Auto falling by more than 2%, Bilibili, JD.com, New Oriental, Weibo, Xpeng Motors, etc. falling by more than 1%, and NetEase and Alibaba falling slightly; Pinduoduo rose more than 5%, and Baidu rose more than 3%.
U.S. economic growth rate revised down to 2.1% in the second quarter
Revised data released by the US Department of Commerce on the 30th showed that the US gross domestic product (GDP) in the second quarter of this year increased by 2.1% on an annualized basis, 2.4% expected, and the preliminary value was 2.4%. The downward revision of GDP was mainly reflected in the reduction in inventories and non-residential fixed investment. The revised GDP price index for the second quarter was 2% vs 2.20% expected and 2.20% previously.
Real GDP grew 2.0% in the first quarter. In the pre-estimates, real GDP growth is 2.4%. The updated estimates primarily reflect downward revisions in private inventory investment and non-residential fixed investment, partially offset by upward revisions in state and local government spending.
Data show that personal consumption expenditure, which accounts for about 70% of the total US economy, was revised slightly upward to 1.7% in the second quarter; Non-residential fixed asset investment, which reflects the investment status of enterprises, was revised downward to an increase of 6.1%. In the quarter, net exports of goods and services dragged the economy down by 0.22 percentage points, while private inventory investment dragged the economy down by 0.09 percentage points, down 0.23 percentage points from the first estimate.
The price index of gross domestic purchases rose 1.7 percent in the second quarter, down 0.2 percentage points from its previous estimate. The PCE price index rose 2.5%, down 0.1 percentage points. Excluding food and energy prices, the PCE price index rose 3.7 percent, down 0.1 percentage points.
In the second quarter, disposable personal income increased by $284.5 billion, or 5.9%, up $36.3 billion from the previous estimate. Real disposable personal income increased by 3.3%, up 0.8 percentage points.
U.S. corporate profit rose 1.6 percent from the previous quarter to $2.367 trillion in the second quarter, -5.9% expected vs. -5.9% prior. During the period, undistributed profit rose 3.2 percent to $699.6 billion, making up for a 17.5 percent plunge in the quarter ended March, while inventory valuation-adjusted net cash flow rose 1.9 percent to $3.187 trillion, rebounding from a 0.9 percent decline in the first quarter. On an annualized basis, quarterly profit fell 6.2%.
Economists said U.S. economic growth was revised downward in the second quarter but remained solid, and momentum appeared to have strengthened in the early third quarter as a tight labor market supported consumer spending. The downward revision reflects downward revisions to inventory investments and spending on corporate equipment and intellectual property products. The U.S. economy is growing at a much higher pace than Fed officials believe is non-inflation at around 1.8 percent. This increases the risk that interest rates will remain elevated for some time, but the slowdown in inflation has led to increasing optimism that the Fed may have ended its rate hikes and could achieve a "soft landing". Economists are now raising their growth forecast for the third quarter to 5.9 percent, though that may have exaggerated the health of the economy.
According to the agency, the released data not only unexpectedly revised the annualized quarterly rate of real GDP in the second quarter (from 2.4% to 2.1%), but also lowered the GDP price index (from 2.2% to 2.0%) and the PCE price index (from 3.8% to 3.7%). Lower-than-expected real output and lower-than-expected inflation are undoubtedly complementary to the Fed's argument that there is no need to raise rates again, so it is not surprising to see a modest rebound in Treasuries and a steepening curve.
Plummet 45%! The small non-farm payrolls data fell short of expectations
U.S. ADP employment reached 177,000 in August, the lowest in five months, lower than expected at 195,000 and down 45% from July's 324,000 increase. The services sector added 154,000 jobs in August, of which education and health (52,000), trade, transport and utilities (45,000), leisure and hospitality (30,000), as well as professional and business (15,000) and information (50,000). In addition, 23,000 jobs were added in the commodity production sector, as did manufacturing (12,000), construction (6,000) and mining (5,000).
ADP chief economist Nela Richardson said this month's data was in line with the pre-pandemic rate of job creation. After two years of extraordinary growth associated with economic recovery, wages and jobs are moving toward more sustainable growth as the impact of the pandemic fades on the economy.
The ADP report showed that job growth slowed significantly this month, mainly dragged down by the leisure and hospitality sectors. After months of strong hiring, employers in the hotel and restaurant sector created 30,000 jobs in August, down from 201,000 in July. In addition, wage growth continued to slow in August. Wages for employed people rose 5.9% year-on-year, the slowest increase since October 2021. For people who changed jobs, wage growth also slowed, to 9.5 percent. All 50 states and Washington, D.C., saw slowing wage growth for the first time.
The lower-than-expected report comes as investors and economists are divided on whether U.S. inflation can continue to fall to 2 percent without a significant slowdown. A strong labor market is a key reason why the U.S. economy will grow faster than many expected in 2023. Last week, Fed Chairman Jerome Powell signaled that the Fed is ready to raise interest rates further if necessary this year.
Responsible editor: Wan Jianyi
Proofreader: Gao Yuan
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