On Wednesday, the three major US stocks indices all closed lower. The Dow dropped more than 400 points, marking its largest single-day loss in a month, while the Nasdaq fell around 300 points as US Treasury yields hit a three-month high. The market remains focused on the upcoming US elections and the outlook for Federal Reserve rate cuts.
The Federal Reserve’s Beige Book, released on Wednesday, showed inflation continues to ease, reinforcing the case for a 25-basis-point rate cut at the November meeting. According to the report, US inflation continues to moderate, with sales prices increasing at a mild to moderate pace in most regions. The Beige Book also noted slight employment growth, with more than half of the regions reporting job gains.
After the Beige Book release, US Treasury yields continued to rise, adding pressure to market sentiment. By late Wednesday, the 10-year Treasury yield, which is sensitive to rate expectations, climbed to 4.26%, its highest level in three months.
With the outlook for Fed rate cuts still uncertain, Treasury yields have been steadily increasing. Goldman Sachs strategists warned that higher Treasury yields could divert capital away from stocks and into bonds and other assets.
With less than two weeks to go before the November 5 US election, investors are bracing for increased market volatility. The odds of Trump defeating Harris have recently risen on betting sites, but polls still show the race is difficult to predict.
In stocks, the “Trump trade” has heated up rapidly, with Trump-related stocks seeing significant gains. Phunware closed up over 21% on Wednesday, with its shares up more than 300% this month. Trump Media & Technology Group also rose more than 4% overnight. Goldman Sachs currency traders Mark Salib and Fernando Alvarado Aguilar noted that various clients, including hedge funds, have been buying assets in preparation for a possible Trump victory.
After the market closed on Wednesday, the earnings season brought some good news. Tesla’s third-quarter EPS beat market expectations, sending its stock surging over 12% in after-hours trading. Tesla reported revenue of $25.18 billion for the quarter, up 8% year-over-year, slightly below market expectations of $25.37 billion. Gross profit came in at $4.997 billion, a 19.6% increase. Non-GAAP diluted EPS was $0.72, up 9.1% year-over-year, beating analyst expectations.
US Stocks
Fundamental Analysis:
Most major tech stocks were down, with Meta falling over 3%, and Apple and Amazon down more than 2%. The semiconductor, chip, and precious metals sectors also saw significant declines. ARM dropped nearly 7%, while Harmony Gold, Newmont, and Kaiser Aluminum fell over 5%. Qualcomm, Broadcom, and Barrick Gold slid more than 3%, with Nvidia and Micron down nearly 3%. Intel and ASML lost close to 2%. McDonald’s dropped over 5% following a serious E. coli outbreak at several locations across the US.
Chinese stocks mostly declined, with the Nasdaq Golden Dragon China Index falling more than 1%. TAL Education dropped over 10%, New Oriental fell more than 8%, and Alibaba and Baidu both slid more than 2%. iQiyi, Tencent, Weibo, Full Truck Alliance, and NetEase were down more than 1%. On the upside, Li Auto gained over 3%, with Trip.com, XPeng, and Huazhu up more than 1%.
Technical Analysis:
Market Trends:
- Dow: -409.94 points (-0.96%) to 42,514.95
- Nasdaq: -296.48 points (-1.60%) to 18,276.65
- S&P 500: -53.78 points (-0.92%) to 5,797.42
Hong Kong Stock Market
Fundamental Analysis:
Hong Kong’s three main indices opened weak on Wednesday. Tech stocks broadly declined, with Kuaishou and Alibaba both down more than 3%, while JD.com dropped nearly 3%. Apple suppliers also fell, with Cowell Electronics down nearly 4%. The drop in global gold prices led to a decline in gold stocks, with Shandong Gold falling over 4%. Property stocks also suffered, with Sunac China falling nearly 5%.
Education stocks led the losses, with New Oriental down more than 7%. The company’s earnings report showed net revenue for Q1 of fiscal 2025 (ending August 31, 2024) rose 30.5% year-over-year to $1.44 billion, in line with expectations.
However, revenue from New Oriental’s e-commerce and direct product sales segments was $1.278 billion, up 33.5% year-over-year, and adjusted EPS came in at $1.60. The company expects Q2 revenue of $851.4 million to $871.8 million, which fell short of market expectations.
Technical Analysis:
- Hang Seng Index: -0.99% to 20,555.04
- Hang Seng Tech Index: -1.78% to 4,523.82
- Hang Seng China Enterprises Index: -1.24% to 7,385.80
FTSE China A50 Index
Fundamental Analysis:
Mainland China’s A-share indices all closed lower in morning trading. By midday, the total market turnover was ¥1.03 trillion, down ¥124.3 billion from the previous session. Over 2,800 stocks posted losses.
Sector-wise, NMN, biopharmaceuticals, and semiconductors led gains, while precious metals and wind power equipment sectors lagged. Beijing Stock Exchange (BSE) stocks remained active, with the BSE 50 Index surging over 6% to hit another record high.
Many BSE stocks, including Meibang Technology, Qifeng Precision, Chenguang Medical, and Xujie Technology, hit the 30% daily limit.
NMN stocks were the top gainers in the morning session, with Teyi Medicine and Kingdomway both hitting their upper limit, while Yabao Pharmaceuticals and Puli Pharma gained more than 10%. CPO stocks bounced back, with Yakang Technology up 20% and Tianfu Communication rising more than 13% to a record high.
Precious metals stocks slid, with Xiao Cheng Technology down more than 8%, and Shandong Gold and Zhongjin Gold following suit.
Technical Analysis:
Market Trends:
- Shanghai Composite: -0.50% to 3,286.17
- Shenzhen Component: -0.82% to 10,489.20
- ChiNext Index: -0.57% to 2,192.76
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