Suddenly a big dive, the tech giants plummeted after hours!

On Wednesday local time, the three major U.S. stock indexes were mixed. At the close, the Dow fell 0.11%, the Nasdaq rose 0.10%, and the S&P 500 rose 0.02%.

Facebook's parent company Meta predicted that second-quarter revenue could fall short of market expectations, and Meta said expectations that new AI tools could boost the company's business needed to be a reality check. After the forecast was released, Meta's share price fell by more than 18% in after-hours trading, and as of press time, it is still down more than 15%, and its market value has evaporated by more than 187.5 billion US dollars (about 1.36 trillion yuan).

Popular Chinese concept stocks generally rose. The Nasdaq China Golden Dragon Index rose 1.05%. Bilibili rose more than 10%, iQiyi rose more than 5%, Weibo rose more than 4%, Weilai and Futu Holdings rose more than 3%, Alibaba, JD.com, and Manbang rose more than 2%, Tencent Music and NetEase rose more than 1%, Baidu rose slightly, Pinduoduo fell slightly, Xiaopeng Motors fell more than 1%, and Li Auto fell more than 3%.

Wall Street awaits GDP report as markets seek to diversify

On Wednesday local time, the three major U.S. stock indexes were mixed. At the close, the Dow fell 42.77 points, or 0.11%, to 38,460.92, the Nasdaq rose 16.11 points, or 0.10%, to 15,712.75, and the S&P 500 rose 1.08 points, or 0.02%, to 5,071.63.

Meta's shares plunged more than 18% in after-hours after raising its spending forecast for the year and expecting second-quarter sales to fall short of analysts' expectations.

Tesla's stock price rose more than 12% after Elon Musk said he wanted to launch cheaper cars. Nvidia fell more than 3%, ending a two-day winning streak.

For several big tech companies, Nationwide's Mark Hackett said that while the seven tech giants have performed well over the past two years and have excellent earnings growth relative to the broader market, this advantage is likely to decline in 2024 and even more pronounced in 2025.

(Forecasts for seven big tech companies and S&P 500 earnings per share.) Source: Nationwide)

Based on Nationwide's forecast, Mark Hackett said: "The seven big tech companies are not as strong as they used to be, and we think this is a positive development for those looking to diversify their investments." ”

Wall Street is currently awaiting Thursday's GDP data, and equities are struggling to gain traction until the results are announced. These data will help shape a view of the Fed's next move.

For weeks, markets have been scaling back their expectations of Fed rate cuts due to a flurry of resilient economic data. Economists at Bloomberg predicted that GDP could fall to around 2.5% in the first quarter, which still suggests that inflationary pressures persist.

Jose Torres of Interactive Brokers said: "Tomorrow's key GDP report comes at a time when market participants are hoping to see a weak data that could lead to an earlier rate cut. But we expect this figure to be stronger than expected, which is good for the income growth outlook, but not for the timing and extent of rate cuts. ”

Meta plunged after hours

In terms of sectors, seven of the 11 major sectors of the S&P 500 index rose and four fell. Consumer staples, utilities, consumer discretionary and real estate stocks led gains.

Popular tech stocks were mixed. Tesla rose more than 12%, Texas Instruments rose more than 5%, Qualcomm and Apple rose more than 1%, Intel, Broadcom, Google, Microsoft, Cisco rose slightly, TSMC, Meta, Micron Technology, and Supermicro Computer fell slightly, Asml, Amazon, Eli Lilly fell more than 1%, and Nvidia and Netflix fell more than 3%.

Tesla rose 12.06%. Tesla's shares surged more than 15% in intraday trading on Wednesday, easing fears of slowing growth after the company announced plans to launch more lower-priced models in early 2025. This comes after Tesla endured a tumultuous week, including mass layoffs, executive departures, price cuts, and a postponement of a meeting with India's prime minister. Despite Tesla's poor first-quarter results, including lower-than-expected profits and its first quarterly revenue decline in nearly four years, the new plan helped Tesla get rid of those headwinds. Jefferies analyst Philip Hushova said CEO Elon Musk was reassuring the market by accelerating the launch of new products. Morgan Stanley analyst Adam Jonas believes that these "more economical" models could be the less functional versions of the Model Y/Model 3, and that the new models will have improved software and hardware capabilities, but at a lower price, and Tesla's share price has long enjoyed a premium valuation due to its driver assistance technology.

Meta fell 0.52%. Meta released its first-quarter earnings report on Wednesday local time, with first-quarter operating income of $36.46 billion, higher than analysts' previous expectations of $36.12 billion. At the same time, Meta predicted that second-quarter revenue could be lower than market expectations, and Meta said that expectations that new AI tools could improve the company's business need to be a reality check. After the forecast was released, Meta's stock price fell by more than 18% in after-hours trading, and its market value evaporated by more than $187.5 billion. Meta expects revenue from April to June to be between $36.5 billion and $39 billion, with a median of $37.8 billion, compared with analysts' previous estimates of $38.3 billion.

At the same time, Meta has raised its spending forecast for this year to support its investment in new AI products and necessary computing infrastructure. Meta expects capital spending in 2024 to be between $30 billion and $40 billion, up from its previous forecast of $35 billion to $37 billion. The total expenditure forecast has also been revised upwards to $96 billion to $99 billion from $94 billion to $99 billion.

Microsoft rose 0.37%. A number of big U.S. tech companies recently cut ties with Sandvine, a Canadian cyber intelligence company, in a move that came after the U.S. government blacklisted it. In February, the U.S. Department of Commerce added Sandvine to its "Entity List" after it provided "large-scale cyber surveillance and censorship" technology to the Egyptian government. Companies such as Microsoft, Salesforce, Zoom, Dell and Intel have terminated their business relationships with Sandvine, according to Bloomberg, citing people familiar with the matter. The services and technologies provided by these companies are critical to Sandvine, such as Dell and Intel components that are at the heart of many of Sandvine's products, where employees use Zoom to communicate on a daily basis, Microsoft products such as Windows are standard on employees' work computers, and the Salesforce platform is an important tool for sales teams to plan deals.

ASML fell 1.03%. On Wednesday local time, ASML approved the appointment of Christophe Fouquet as the company's new chief executive at its annual meeting in Weldhoven, the Netherlands. Christoph Fouquet, 50, was previously in charge of ASML's "EUV" product line and has been with ASML for 15 years. He will succeed Peter Winnink, who has been CEO since 2014, and under his leadership, ASML's share price has increased more than tenfold to become Europe's largest technology company with a market capitalization of more than 300 billion euros. Pete Winnink said at the meeting that although some people think he retired at the peak of the company, he believes that the company is not even in the middle of its development. Christophe Fouquet said he was very pleased to start a new chapter for ASML and continue to create significant value for shareholders.

Amazon fell 1.64%. On Wednesday local time, the UK's Competition and Markets Authority (CMA) said it was reviewing Microsoft's AI partnership with Mistral AI and Amazon, and seeking third-party opinions on Microsoft's recruitment of former Inflection AI employees and related arrangements. Microsoft recently appointed DeepMind co-founder Mustafa Suleiman as head of its newly formed consumer AI division and hired several employees from its startup, Inflection AI. The UK's Competition and Markets Authority said it had not reached any conclusions on whether the deals complied with UK M&A rules or raised competition concerns.

Microsoft said that common business practices, such as hiring talent or making small investments in AI startups, will promote competition and not mergers. Amazon said it was unprecedented for the UK's Competition and Markets Authority to scrutinize such partnerships.

Most of the big bank stocks fell, and UBS Group AG faced new troubles

Most of the big bank stocks fell. UBS Group fell more than 3%, Wells Fargo, BlackRock, Citigroup, Goldman Sachs, Bank of America fell slightly, and Morgan Stanley and JPMorgan Chase rose slightly.

UBS Group AG fell 3.63%. On Wednesday local time, the American hedge fund Appaloosa launched a new lawsuit against UBS, alleging that UBS Group misled investors about its financial situation in the previous acquisition of Credit Suisse. The lawsuit was filed in federal court in Newark, New Jersey, in connection with the zeroing out of Credit Suisse's $17 billion AT1 bond in March 2023. Appaloosa claims that Credit Suisse CEO Ulrich Köllner falsely claimed that liquidity was "very strong and growing" when the bank suffered a deposit outflow, similar to the collapse of Silicon Valley Bank. The lawsuit seeks unspecified damages under U.S. securities laws and New Jersey anti-racketeering laws. FINMA, the Swiss Financial Market Supervisory Authority, failed to meet its repayment obligations to AT1 bondholders, shocking investors and sparking multiple lawsuits in the United States and Europe.

JPMorgan rose 0.49%. JPMorgan Chase & Co. is in discussions with investors about two large synthetic risk transfer (SRT) deals that are expected to launch in the fourth quarter of this year for a total of about $2 billion in bonds, according to people familiar with the matter. At least one of the transactions will be related to the corporate debt portfolio. These discussions are still preliminary and transaction details are subject to change. These transactions are designed to transfer the credit risk of banks through the issuance of bonds and credit derivatives linked to loan pools.

Energy stocks were mixed. Shell, Chevron, Murphy, BP, ExxonMobil fell slightly, and Occidental Petroleum, ConocoPhillips, U.S. Energy, Petrobras fell slightly.

Editor-in-charge: Zhu Yumeng

Proofreading: Ran Yanqing

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