2024-02-21 22:49:33
U.S. Stock Diary｜The three indexes developed individually and Nvidia’s performance surged following the market opened (Michael M. Santiago via Getty Images)
Wall Street stock market performance was cautious, trading was slightly quiet, and the three major indexes developed individually. The Dow rose nearly 50 points, the S&P 500 rose 0.1%, and the Nasdaq fell 0.3%, dragged down by Nvidia’s decline. NVIDIA announced its results following the market closed. Before the results were announced, investors worried that its valuation was too high and it fell. However, the company’s performance and outlook were both better than expected, and the stock price rose by 10% during the extended trading session following the market closed. The Federal Reserve released the minutes of its January interest rate meeting, at which officials believed that interest rates have probably reached their peak.
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Market conditions on February 21 (Wednesday)
l The Dow Jones index rose 48.44 points, or 0.13%, to 38,612.24 points.
l The S&P 500 index rose 6.29 points, or 0.13%, to 4,981.80 points.
l The Nasdaq index fell 49.91 points, or 0.32%, to 15,580.87 points.
l New York oil futures for April delivery closed at US$77.91 a barrel, up US$0.88 or 1.1%.
l New York April gold futures closed at $2,034.3 an ounce, down $5.5 or 0.3%.
l The U.S. 10-year Treasury bond yield closed at 4.325%, up 5.0 points.
The market is paying attention to Nvidia’s performance. The company announced its results following the market closed. Before the results were announced, the company’s stock price fell for two consecutive days. It closed down 2.85% to 674 yuan on Wednesday. The company announced its fourth-quarter results following the market closed, in which revenue surged 2.6 times year-on-year and exceeded market expectations. Net profit, earnings per share, and this quarter’s outlook were all higher than market expectations. They rose by regarding 10% during the extended trading session following the market closed.
Other chip stocks were encouraged by Nvidia. ARM rose 8% during the extended trading session, while AMD and TSMC rose 3% and 2% respectively.
Rivian, an electric vehicle stock that also announced its earnings following the market closed, had better-than-expected fourth-quarter revenue, but its expected production volume in 2024 is significantly lower than market expectations. It also announced that it would lay off 10% of its workforce. It fell by more than 16% during the extended trading period.
UBS’s latest forecast is that the Federal Reserve will only cut interest rates in June, compared with the previous expectation of starting in May. UBS economist Brian Rose highlighted recent unexpected increases in employment and inflation data as catalysts for the change. He believes the Fed may cut interest rates once a quarter until it reaches a range of 3.25% to 3.5%.
The Federal Reserve released the minutes of its January interest rate meeting, in which most Fed officials pointed out the risk of raising interest rates too quickly, and some officials believed that there was a risk of stalling progress in curbing inflation. Federal Reserve officials judged that interest rates are likely to be at their peak, and several officials cited the risks posed by loosening financial conditions. The Fed will hold discussions around the balance sheet to decide on the pace of balance sheet reduction, and some officials believe that slowing down the pace of balance sheet reduction may help smooth the transition of policy.
Federal Reserve Governor Michelle Bowman said the current economic environment is “certainly” not the time to cut interest rates. The Wall Street Journal commented that most officials are worried that price pressures will become entrenched if interest rates are cut too early, rather than the risk of keeping interest rates for too long.
The market expects the Federal Reserve to cut interest rates, and U.S. mortgage rates are the first to rise. Last week, the 30-year fixed-rate mortgage rate rose sharply by 0.19%, rising above 7% for the first time since the end of last year. The number of mortgage applications fell by 10% week-on-week.
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