The Federal Reserve meeting minutes released on Wednesday local time showed that a majority of participants believed that a rate cut in September might be appropriate.
On August 21, local time, the three major U.S. stock indices closed higher. By the close, the Dow Jones Industrial Average rose by 0.14%, the Nasdaq Composite rose by 0.57%, and the S&P 500 Index rose by 0.42%.
U.S. government data released on Wednesday showed that job growth in the United States in the year ending March might not have been as strong as previously reported. The preliminary benchmark revision by the U.S. Bureau of Labor Statistics indicated that the U.S. non-farm employment number for the aforementioned period might be revised downward by 818,000, which translates to a monthly decrease of approximately 68,000 people. The revision in the number of employed persons is the largest since 2009.
In the market, popular Chinese concept stocks generally rose, with the NASDAQ Golden Dragon China Index up by 2.39%. Vipinhui rose by more than 9%, Futu Holdings, XPeng Motors, and Li Auto rose by more than 4%, NIO and Alibaba rose by more than 3%, NetEase and Full Truck Alliance rose by more than 2%, Baidu rose by 2%, Pinduoduo and Weibo rose by more than 1%, Huya, iQIYI, Tencent Music, and Bilibili saw a slight increase, Douyu fell by more than 2%, and JD.com fell by more than 4%.
The Federal Reserve meeting minutes indicated that a rate cut in September is "almost certain."
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On Wednesday, August 21, local time, the three major U.S. stock indices closed higher. By the close, the Dow Jones Industrial Average rose by 55.52 points, or 0.14%, to 40,890.49; the Nasdaq Composite rose by 102.05 points, or 0.57%, to 17,918.99; the S&P 500 Index rose by 23.73 points, or 0.42%, to 5,620.85.
The S&P 500 Index rose by 0.42%, with almost all major component stocks rising. The trading volume on U.S. exchanges was less than 10 billion shares, the lowest in six weeks. Target Corporation rose by more than 10%, with second-quarter results exceeding expectations across the board and an upward revision of full-year profit guidance. Macy's Inc. reported a net sales figure of $4.94 billion for the second quarter, a year-over-year decrease of 3.8%, and closed nearly 13% lower.
Before Federal Reserve Chairman Jerome Powell's speech at Jackson Hole, Wall Street traders carefully reviewed the latest Federal Reserve policy meeting minutes.
The Federal Reserve meeting minutes released on Wednesday showed that "some participants believed that the rise in the unemployment rate and the recent progress in reducing inflation provided a reasonable justification for a 25 basis point rate cut at this meeting, or they might have voted in favor of a rate cut." "The vast majority indicated that if economic data continue to align with expectations, then a rate cut at the next meeting might be appropriate."
Furthermore, most participants pointed out an increased risk in the job market, while the risks to the inflation target have diminished. Some participants were concerned that a gradual weakening of the labor market could evolve into a more severe deterioration. Nonetheless, policymakers believe that inflation has slowed, making progress towards the 2% target, and they expect these trends to continue exerting downward pressure on inflation in the coming months. The minutes also mentioned that the Federal Reserve's balance sheet reduction plan will continue at the current pace, and participants expressed concern about leverage risks in the U.S. Treasury market and the stability of the banking system, emphasizing the need for ongoing monitoring of the money market environment and risks related to non-bank financial intermediaries."The Federal Reserve meeting minutes have dispelled all doubts about a rate cut in September," said Jamie Cox of Harris Financial Group. "The Fed's communication strategy is to make the meeting less market-moving, and they are sticking to the script."
Brett Kenwell of eToro stated: "The question is not whether the Fed will cut rates in September, but by how much? The market currently estimates a higher likelihood of a 25 basis point cut over a 50 basis point cut, with the 50 basis point cut appearing to be the more likely outcome, provided that the August jobs report does not disappoint."
Samuel Mazzilli of UBS Global Wealth Management indicated that the Fed is prepared to cut rates, and with the economy and earnings fundamentals remaining strong, the environment is still favorable for the stock market. He believes that quality growth is still expected to outperform the broader market.
On other news fronts, official U.S. government data released on Wednesday showed that job growth in the country over the year ending in March may not have been as strong as previously reported. The Bureau of Labor Statistics' preliminary benchmark revision indicated that nonfarm payrolls for the period might be revised down by 818,000, translating to a proportional monthly decrease of approximately 68,000. Economists had largely anticipated a revision downward, with some even suggesting it could be as high as 1 million. The final data will be released early next year. Nonfarm data is subject to benchmark revisions annually, but this year's adjustments are being closely watched by market and Fed observers as they search for signs of a cooling labor market or one that is slowing faster than initially reported. Some economists have suggested that the initially reported nonfarm payroll data may have been inflated by many factors, including adjustments for business creations and closures, as well as the way unauthorized immigrant workers are counted.
Following the release of the revised U.S. nonfarm employment data for March, "Fed mouthpiece" Nick Timiraos commented on social media that U.S. job growth is indeed not as strong as previously reported monthly. The data showed that over the 12 months ending in March, the U.S. added 818,000 fewer jobs than previously reported, which reduced the monthly average job count (previously 246,000) by 68,000. The specific monthly revisions will not be officially announced until February 2025. In addition to the total number, the report's revision to the employment level was 0.5%, the largest since 2009.
Krishna Guha of Evercore stated that the significant revision in wage data will reinforce the Fed's assessment that under restrictive policies, the labor market has been softening, and the Fed needs to adjust interest rates in a timely manner to prevent this situation from worsening further.
In other market news, U.S. Treasury yields were mixed, with the 2-year note yield rising 1.2 basis points to 4.072%, the 3-year note yield rising 1 basis point to 3.873%, the 5-year note yield falling 0.5 basis points to 3.76%, the 10-year note yield falling 1.4 basis points to 3.874%, and the 30-year bond yield falling 1.7 basis points to 4.125%.
International oil prices fell across the board, with the U.S. October contract down 1.68% at $71.94 a barrel, and the Brent October contract down 1.41% at $76.07 a barrel.
COMEX gold futures closed down 0.02%, at $2,550.2 per ounce; COMEX silver futures closed up 0.38%, at $29.63 per ounce.
NVIDIA Launches First AINPC in GamingIn terms of sectors, the S&P 500's eleven major sectors saw 9 gains and 2 declines. Among them, the materials sector led the gains with a 1.15% increase, while the financial and energy sectors fell by 0.14% and 0.01%, respectively.
Most popular tech stocks rose. Texas Instruments and Advanced Micro Devices (AMD) increased by over 2%, Intel rose by 2%, ASML, Meta, and Qualcomm increased by over 1%, Tesla, NVIDIA, Arm, and Advanced Micro Devices (AMD) gained nearly 1%, Amazon, Cisco, Micron Technology, and Eli Lilly saw minor increases, while Apple, Broadcom, Microsoft, Netflix, TSMC, and Alphabet Inc. (Google A) experienced minor declines.
Microsoft fell by 0.16%. On Wednesday, Microsoft adjusted the reporting method of its business units, attributing part of the search and news advertising revenue to the Azure cloud computing division to more clearly demonstrate AI's contribution to investors. At the same time, Microsoft transferred the revenue of AI and voice technology services Nuance to the productivity business unit, which includes the Office suite. This move led to a recalculation of the revenue growth of these departments in the previous fiscal year and revised the expectations for the September quarter. Despite the slowdown in Microsoft's cloud business growth, the company stated that it would accelerate growth in the second half of the 2025 fiscal year. After the adjustment, Microsoft expects intelligent cloud revenue to be between $23.8 billion and $24.1 billion; it expects the revenue of Azure and other cloud services to decrease by 1 to 2 percentage points on a sequential basis in the first fiscal quarter; the productivity and business processes department's revenue is revised up to between $27.75 billion and $28.05 billion.
Alphabet Inc. (Google A) fell by 0.80%, and Apple fell by 0.05%. The UK's antitrust regulator closed its investigation into Google and Apple's app stores before the implementation of new digital market laws. The UK Competition and Markets Authority (CMA) stated that once the new rules take effect, its initial focus will be on app stores. These new laws will grant the CMA broader powers, including the ability to impose substantial fines on companies that violate the rules. The soon-to-be-enacted Digital Markets, Competition and Consumer Act will allow regulators to investigate companies designated as having a "strategic market position." The draft stipulates that fines can be as high as 10% of the company's global annual revenue. "It is crucial that UK tech businesses, including app developers, have access to a fair competitive app ecosystem, helping to develop the industry, promote investment, and bring better outcomes for UK consumers," said Will Heath, the CMA's Director of Digital Markets.
In addition, Matt Fisher, the long-time head of Apple's App Store, will leave due to the company's restructuring. It is known that Apple's transformation is to cope with global regulatory scrutiny.
NVIDIA rose by 0.98%. NVIDIA released a game demo on Wednesday, where players can interact with NPCs through voice dialogue to understand level objectives, optimize equipment configurations, and then adjust weapon colors to start fighting. NVIDIA ACE is a platform that allows developers to create intelligent game NPCs through generative AI. In short, ACE can create unprecedented fully-voiced, fully-animated video game characters.
Tesla rose by 0.98%. A federal judge dismissed a lawsuit alleging that X Company (formerly Twitter) forced disabled employees to resign after Elon Musk took over the company. Judge Martinez-Olgin stated on Wednesday that banning remote work does not constitute disability discrimination. The plaintiff, Dmitry Borodaenko, a cancer survivor and former engineering manager, claimed to have been fired for refusing to return to the office during the pandemic. The judge found that the plaintiff failed to specify how Musk's policy of requiring employees to return to the office particularly affected disabled employees and gave him four weeks to submit a more detailed amended lawsuit. This case is one of several lawsuits filed by former employees after Musk's acquisition of X Company, some of which allege that the company did not give notice of layoffs, did not pay promised severance pay, and targeted women and older employees for layoffs.
Financial stocks saw more declines than gains. American Express fell by over 2%, Citigroup, Wells Fargo, and Capital One Financial fell by over 1%, Mastercard, Regional Financial, Goldman Sachs, Morgan Stanley, U.S. Bancorp, and Travelers Insurance saw minor declines, while JPMorgan Chase, Visa, Bank of America, Mizuho Financial, BlackRock, American International Group, and UBS saw minor increases, and Deutsche Bank rose by over 1%.
Energy stocks were mixed. Chevron, BP, Imperial Oil, Schlumberger, Duke Energy, and Murphy Oil saw minor increases, while Shell, Marathon Oil, American Energy, ConocoPhillips, Occidental Petroleum, ExxonMobil, and Petrobras saw minor declines, and Apache Corporation fell by nearly 1%.
Popular Chinese concept stocks generally rose, with the NASDAQ Golden Dragon China Index up by 2.39%. Vipinhui rose by over 9%, Futu Holdings, XPeng Motors, and Li Auto rose by over 4%, NIO and Alibaba rose by over 3%, NetEase and Full Truck Alliance rose by over 2%, Baidu rose by 2%, Pinduoduo and Weibo rose by over 1%, Huya, iQIYI, Tencent Music, and Bilibili saw minor increases, Douyu fell by over 2%, and JD.com fell by over 4%.Vipshop surges 9%. In terms of news, Vipshop released its financial report for the second quarter of 2024, showing that the company achieved a revenue of 26.9 billion yuan in the second quarter, with a Non-GAAP net profit of 2.2 billion yuan; the GMV was 50.6 billion yuan, which is on par with the same period last year. The number of active Super VIP (SVIP) users increased by 11% year-on-year, contributing to 47% of online consumption. At the same time, Vipshop's board of directors approved a new stock repurchase plan, allowing the company to repurchase up to $1 billion of American Depositary Shares or Class A common stock within 24 months after completing the existing stock repurchase plan.