Closing: U.S. stocks were mixed, the Nasdaq fell more than 2%, and Nvidia fell 10%, dragging technology stocks lower

In the early morning of the 20th, Beijing time, U.S. stocks closed mixed on Friday, with Nvidia falling 10% and dragging technology stocks sharply. The S&P 500 and Nasdaq fell for the sixth straight session. Investors downplayed the impact of Israel's military strike on Iran and instead focused on the Federal Reserve's monetary policy path and the latest earnings reports from Netflix and Procter & Gamble.

The Dow rose 211.02 points, or 0.56 percent, to 37,986.40, the Nasdaq lost 319.49 points, or 2.05 percent, to 15,282.01 and the S&P 500 lost 43.89 points, or 0.88 percent, to 4,967.23.

The three major U.S. stock indexes were mixed this week, with the Dow rising slightly by 0.01% this week. The S&P 500 fell 3.05% for the week, its biggest weekly decline in six months, and recorded its third consecutive weekly decline.

The Nasdaq plunged 5.52% this week, marking the fourth consecutive week of decline.

U.S. stocks had a rough start to the second quarter, with major stock indexes having been sluggish since April, with all three major indexes falling at least 4.5% during the month.

Tom Lee, co-founder and head of research at financial market research firm Fundstrat, warned not to buy when the stock market is down now, as there will be a wave of sell-off in the coming weeks before it really bottoms out.

Tom Lee, who previously made a very accurate prediction of the S&P 500 in 2023, is one of the most bullish analysts on the stock market this year.

However, he cautioned that opportunistic investors should not rush into the market. He noted that the VIX, a market volatility gauge, is soaring, and rising volatility usually triggers a sell-off by investors, which could lead to short-term pressure on the stock market.

Tom Lee also said that if the conflict in the Middle East does not escalate further, market volatility eases and investors show signs of slowing the pace of selling, then U.S. stocks could bottom out next month or even sooner.

The market lowered the Fed's interest rate cut expectations The possibility of a rate hike in June has emerged

The main reason for the recent correction in the U.S. stock market is that the market has lowered its expectations for the Fed to cut interest rates. Economists and strategists now believe that the Fed will not cut rates until at least September, and a growing number of market participants even believe that the Fed may not cut rates at all this year.

Chicago Fed President Austan Goolsbee said on Friday that progress in reducing inflation has stalled and that it is necessary to keep interest rates unchanged in order to observe economic development from the data.

"So far in 2024, progress on inflation has stalled," Goolsbee said. You should never put too much emphasis on any one month's data, especially inflation data, it does have a lot of noise, but if it is relatively high for three consecutive months, it cannot be ignored. ”

Minneapolis Fed President Neel Kashkari said Thursday that the central bank is likely to keep interest rates steady throughout the year and that the first rate cut may not happen until 2025.

New York Federal Reserve Bank President John Williams even mentioned a possible rate hike this year. He said that the Fed is not in a hurry to cut interest rates, economic data will determine the timing, and if rate hikes can help achieve the Fed's inflation target, then rate hikes are also possible.

Atlanta Fed President Raphael Bostic said he expects to cut rates only once this year and should wait until near the end of the year.

JPMorgan Chase & Co. President Daniel Pinto believes that the Fed may not cut interest rates at all this year given the persistently high level of inflation.

Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management, said: "The biggest concern in the stock market right now is inflation, which is accelerating again, and it is questionable whether the Fed will cut rates in 2024, let alone once or twice." ”

The market has now begun to consider the possibility of a Fed rate hike in June.

As of this week, Secured Overnight Funding Rate (SOFR) options have priced in a roughly 3.6% chance of a 25 basis point rate hike in June, according to the Atlanta Fed's Market Probability Tracker.

Derek Tang, an economist at Monetary Policy Analytics, said: "New York Fed President Williams has not argued against the issue of rate hikes. The policy-setting FOMC still has a lot of room to remove expectations of a rate cut, which would tighten financial conditions. I think they're nervous about raising rates again, and I hope they can manage the risk of a recession. But they're walking a tightrope, and there's a lot less room for error now than they did a few months ago. ”

Former senior NATO officials believe that the situation between Iran and Israel will not escalate

Iran's Fars News Agency reported on the 19th local time that explosions were heard in the Kajavaristan area of Isfahan Province in central Iran. At the same time, a U.S. official confirmed to the media that Israel launched a retaliatory attack on Iranian territory with missiles launched in the early morning of the 19th. U.S. officials said Israel's retaliatory attack was "limited."

It is reported that Israel is currently "assessing the effectiveness of this air strike and the damage it caused (to Iran)" after a limited Israeli strike on Iran.

Prior to this, in the early morning of April 14, Iran's Islamic Revolutionary Guard Corps issued a statement saying that it had launched missiles and drones at Israeli targets, which was in response to Israel's attack on the Iranian consulate in Syria on the 1st. Israel, for its part, said Iran's move would be "met with a response."

Gen. James Stavridis, NATO's former Supreme Allied Commander, said on Friday that Israel's attack on Iran was "very mild and carefully calibrated" using small packages of explosives and drones, rather than manned aircraft.

"Both Jerusalem and Tehran are downplaying these incidents, which means de-escalating the conflict," he said. ”

Stocks in focus

Nvidia plunged 10%. After TSMC lowered its growth forecast for the chip market, global semiconductor stocks retreated, and investors rushed to lock in profits.

TSMC on Thursday lowered its growth forecast for the global logic semiconductor industry this year from more than 10% to around 10%. The change has heightened concerns about a recovery in demand for chips used in electric vehicles, computers and smartphones.

Kazuyoshi Saito, senior analyst at IwaiCosmo Securities, said: "Chip stocks have been in the spotlight due to the development of artificial intelligence, so the slightest concern about their prospects can trigger a massive sell-off. "

Tesla announced on Friday (April 19, 2024) that it will recall 3,878 CyberTruck pickup trucks to repair or replace the accelerator pedal. The reason is that these accelerator pedals can shift and cause the vehicle to accelerate inadvertently, increasing the risk of crashes.

According to the recall report filed with the National Highway Traffic Safety Administration (NHTSA), Tesla received two customer reports related to the issue. According to Tesla, when the driver presses the accelerator pedal strongly, the CyberTruck's accelerator pedal may shift and become stuck in the interior trim.

The recall also provides the first glimpse into how many Cybertruck electric pickup trucks the company has sold since last November.

Microsoft will release its earnings report on April 25. BofA raised its revenue forecast by 1 percent, mainly due to the strong performance of Azure and Microsoft 365. The bank maintained its price target of $480 on Microsoft, implying nearly 19% upside potential from Thursday's close.

Google CEO Sundar Pichai announced the full integration of Google's AI workforce structure, saying the move will help the tech giant develop AI products and services more quickly and efficiently.

In a blog post and a notice to employees on Thursday, Pichai said that the AI team at Google Research, which focuses on large AI models and related areas responsible for ensuring the security of AI technology, will be fully integrated into the company's flagship AI business unit, DeepMind.

The DeepMind team has developed Google's state-of-the-art AI model, Gemini, which was unveiled late last year and can process different forms of information such as video, audio, and text. Pichai said last year that the company plans to release a series of AI models in 2024.

US tech and retail giant Amazon may soon be asked to formally recognise the union at its Coventry warehouse in the UK following a government agency's ruling in favour of the GMB union.

Meta Platforms unveiled Llama 3, the latest addition to its family of open-source large language models, Llama 3, on Thursday. A total of two open-source Llama 3 8B and Llama 3 70B models have been released for free use by external developers. Both versions of Llama 3 will also be available on major cloud providers soon.

Michael Saylor, founder of MicroStrategy, the largest holder of Bitcoin, has sold 370,000 shares of the company this year, earning more than $370 million.

Saylor struck a share sale plan with the company last summer that would allow him to sell up to 400,000 shares in the first four months of 2024. For the 59-year-old Saylor, it was a timely agreement.

American Express reported fiscal first-quarter revenue of $15.8 billion, up 11% year-over-year, better than the consensus of $15.77 billion, net income of $2.44 billion, up 34% year-over-year, beating expectations, and earnings per share of $3.33, also better than the consensus.

The company's credit card spending rose 6% to $367 billion, slightly above market expectations of $366 billion. The company still expects full-year revenue growth of up to 11% compared to 2023.

Procter & Gamble's fiscal third-quarter revenue was $20.2 billion, up 0.6% year-over-year and $240 million below expectations. Diluted earnings per share (EPS) were $1.52, up 11% year over year. Non-GAAP EPS came in at $1.52, $0.11 higher than the consensus estimate. Gross margin, a measure of profitability, was also higher than expected in the fiscal third quarter, which rose three percentage points from the year-ago quarter to 51.2%.

P&G said the cost decline was partly due to a reduction in overtime on the production line and a shift to lower-cost raw materials. While earnings for the quarter beat expectations, sales fell short of expectations.