Fed: 100k Jobs Loss Possible in Oct, US Stocks Rise, Chinese Stocks Plunge
- 2024-09-05
- News
- 54
- 28
One hundred thousand jobs vanish, yet the US stock market is in a frenzy? Decoding the economy's "ice and fire" scenario.
The economic barometer changes in the blink of an eye, sometimes cloudy and overcast, sometimes bright and sunny, leaving investors as if in a fog, hard to grasp. Recently, the US economy has staged such a "ice and fire" drama: on one side, hurricanes are rampant, and waves of strikes are rising, which is expected to lead to the disappearance of 100,000 jobs; on the other side, the three major US stock indices opened high and went higher, singing all the way, continuously setting new historical highs. What economic logic is hidden behind this seemingly contradictory phenomenon? Is it an irrational carnival of market sentiment, or is there another mystery?
The signal from the Federal Reserve: injecting a stimulant into the stock market.
To solve this economic puzzle, it is essential to mention the recent statement by Federal Reserve Governor Christopher Waller. He pointed out that as long as the interest rate remains above the neutral level, it means that the Federal Reserve has a considerable room for interest rate cuts. This statement undoubtedly injected a stimulant into the market.
As we all know, interest rates are an important lever affecting economic development and stock market trends. When the economy is overheated and inflation is high, the Federal Reserve usually chooses to raise interest rates, suppress investment and consumption by increasing borrowing costs, and thus cool down the economy. On the contrary, when the economy is sluggish and unemployment rises, the Federal Reserve will choose to cut interest rates, stimulate investment and consumption by reducing borrowing costs, and thus promote economic recovery.
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Waller's speech revealed an important signal: the Federal Reserve is ready to deal with the risk of economic downturn. Once the economic data continues to deteriorate, interest rate cuts will become a high-probability event. For investors, interest rate cuts mean lower corporate financing costs and stronger profitability, and stock market valuations will also rise. Naturally, it will have a positive driving effect on the stock market.
Therefore, although the US job market may face challenges in October, the market is not pessimistic about it. Instead, it interprets it as a harbinger of the Federal Reserve's shift to a loose monetary policy, which has triggered a stock market frenzy.
Tech giants lead the rise: is it "false fire" or "real strength"?In this collective revelry of the U.S. stock market, the Nasdaq index, dominated by technology stocks, has been particularly eye-catching, having closed higher for five consecutive trading days and setting a new historical record. Among the large-cap technology stocks, Nvidia, Apple, Google, and others have seen significant increases, becoming the main force driving the stock market upward.
The strong performance of technology stocks is partly due to investors' optimistic expectations for the future development prospects of the technology industry. In recent years, emerging technologies such as artificial intelligence, cloud computing, and big data have been booming, bringing unprecedented opportunities to the technology sector. Technology giants, with their strong technical capabilities, substantial financial reserves, and large user base, have maintained an advantageous position in fierce market competition, with their profitability continuously improving, which also supports the sustained rise in their stock prices.
However, some market analysts have expressed concerns about the rapid increase in technology stocks, believing that there is a certain "bubble" component involved. They point out that the current valuation of technology stocks is already at a historical high. If future economic growth falls short of expectations, or if the Federal Reserve's monetary policy shifts, technology stocks may face the risk of a correction.
Chinese concept stocks defy the trend and fall: Is it a "danger" or an "opportunity"?
In stark contrast to the lively scene in the U.S. stock market, Chinese concept stocks have encountered a "cold winter," falling collectively and surprising many.
Chinese concept stocks refer to the stocks of Chinese companies listed in the United States. In recent years, with the rapid development of China's economy and the continuous strengthening of corporate strength, more and more Chinese companies have chosen to go public in the United States, and Chinese concept stocks have also become a focus of investor attention.
Recently, Chinese concept stocks have been impacted by a series of bearish factors. The uncertainty of Sino-American trade frictions has cast a shadow over Chinese concept stocks, with investors worried that an escalation of trade frictions will have a negative impact on the operations of Chinese companies. The slowdown in China's economic growth has also triggered market concerns about the profit prospects of Chinese concept stocks. Some Chinese concept stock companies have also encountered their own issues, such as financial fraud and lack of transparency in information disclosure, further undermining investor confidence.
Faced with the collective decline of Chinese concept stocks, investors have different opinions. Some investors believe that this is just a short-term fluctuation and that the long-term investment value of Chinese concept stocks still exists. The current decline instead provides an opportunity to bottom-fish. Other investors believe that the challenges faced by Chinese concept stocks remain severe, and the future trend is still unclear, requiring cautious observation.
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