PPI inflation exceeded expectations, US bonds accelerated their decline, tech stocks dragged down the US market, with NVIDIA dropping nearly 5% at one point, and Bitcoin plunged after hitting a new high.

After the unexpected increase in core CPI in February, there are signs of continued inflation in the U.S. PPI in February: the year-on-year growth of PPI in February was 1.6%, faster than expected, with a month-on-month growth rate of 0.6%, double the expected rate; the core PPI increased by 2.0% year-on-year, unchanged from January, failing to slow down to the expected 1.9%, with a month-on-month growth slowing down to 0.3% compared to January, still higher than the expected growth rate of 0.2%.

PPI adds evidence to the stubbornly high U.S. inflation. Other U.S. economic data released on Thursday were mixed: February retail sales turned positive month-on-month from negative growth in January, but the growth rate of 0.6% was lower than the expected 0.8%, raising concerns about the sustainability of consumer spending; initial jobless claims last week decreased by 9,000 to a new low in three weeks, showing resilience in the labor market.

Commentators believe that the new batch of data does not bring anything new before the Fed's interest rate meeting next week. They are a reflection of the past month - high inflation is sticky, and there are signs of weakness in some other economic sectors. The data suggest that the Fed may cut interest rates this year, but will not act hastily. The current issue is whether traders will reconsider how quickly the Fed will cut rates and whether the upward momentum of U.S. stocks will significantly slow down. So far, the market has shaken off concerns about sticky inflation and the Fed's cautious stance. The most likely time to start cutting rates is still June.

Currently, the market expects the Fed to cut rates three times this year, half the number expected in January.

After the release of PPI and retail data, U.S. Treasury prices accelerated their decline, with yields rising intraday. The yield on the benchmark 10-year U.S. Treasury rose by more than 10 basis points, testing above 4.30%, and the yield on the two-year U.S. Treasury, sensitive to interest rates, hit a two-week high, with the two-year yield testing above 4.70% for the first time in two weeks; the U.S. dollar index rapidly expanded its gains, reaching a high for the week, erasing all declines since last Friday's non-farm payroll report strengthened expectations of a rate cut in June.

The sharp rise in U.S. bond yields put pressure on some tech stocks. While Microsoft and Apple rebounded, Tesla fell more than 4% for two consecutive days, dragging down the market led by chip stocks such as Nvidia, causing the Dow to fall for the first time this week. Chinese concept stocks overall retreated, pausing their four-day outperformance against the broader market.

In the foreign exchange market, as the U.S. dollar rebounded, non-U.S. currencies fell across the board, with the euro, yen, and pound all falling to their lowest levels in a week. Bitcoin hit a new all-time high for four consecutive days this week, breaking through $73,700 for the first time in history, but failed to sustain the rally, dropping by about $5,000 after hitting a new high, briefly falling below $69,000. In the commodity market, following the release of the PPI data, gold accelerated its decline as the US dollar rebounded. The intraday drop in New York gold futures widened to over 1%, erasing the gains that had approached the record high at the close on Wednesday. International crude oil resisted the pressure from the rising US dollar and continued to rebound. US oil closed above $80 for the first time in four months, hitting a new high for the fourth consecutive month. The International Energy Agency (IEA) raised its expectations for global oil demand growth this year in its monthly report, while lowering expectations for supply from countries outside OPEC, helping to support the rise in oil prices.

Dow ends three-day winning streak, S&P and Nasdaq fall for two consecutive days, Tesla drops over 4% in two days, Microsoft hits new high against the market, Chinese stocks fall from three-month high

The three major US stock indices opened higher but turned lower about 15 minutes after the opening. At midday, when hitting a new daily low, the Dow Jones Industrial Average, which had risen nearly 120 points at the opening, fell by nearly 340 points, or nearly 0.9%. The S&P 500, which had risen over 0.2% at the opening, fell by over 0.8%, and the Nasdaq Composite, which had risen over 0.4% at the opening, dropped by over 0.8%. The declines narrowed towards the end of the trading session.

Ultimately, the three major indices collectively closed lower for the first time this week. The Dow, which had risen for three consecutive days, fell by 137.66 points, or 0.35%, to 38,905.66 points, falling from the closing high set on March 1. The Nasdaq fell by 0.3% to 16,128.53 points, and the S&P fell by 0.29% to 5,150.48 points, both falling for two consecutive days and giving back the over 1% gains from Tuesday.

The small-cap Russell 2000, dominated by value stocks, fell by 1.96%, underperforming the broader market, falling to its lowest level since February 26 after halting a three-day decline on Wednesday. The tech-heavy Nasdaq 100 fell by 0.3%, declining for two consecutive days. The Nasdaq Tech Market Cap Weighted Index (NDXTMC), which measures the performance of tech stocks in the Nasdaq 100, fell by 0.31% after rising over 2% on Tuesday.

In the main US stock market, all major indices fell on Thursday, with small-cap indices falling much more than large-cap ones.

Among the major sectors in the S&P 500, only two closed higher on Thursday. The energy sector, supported by the rise in oil prices, rose for two consecutive days by over 1%, performing the best over the two days, while the communication services sector, where Google is located, rose by over 0.5%. Among the nine sectors that fell, the interest rate-sensitive real estate sector led the decline with a 1.6% drop, while other sectors fell by less than 0.9%. The IT sector, including Microsoft and Nvidia, fell by 0.1%, ranking at the bottom in terms of decline.

Among the seven major tech stocks including Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta, and Tesla, only Nvidia and Tesla remained in a downtrend throughout the day. Tesla, which fell by 4.5% on Wednesday, dropped by 4.1% on Thursday, marking the second consecutive day of over 4% decline and the third consecutive day of decline, hitting a new low since May 2023 for the second consecutive day. In the FAANMG six major technology stocks, Microsoft closed up 2.4%, poised to refresh the closing record high set on February 9 after a slight retreat on Wednesday; Apple, which halted its three-day rise on Wednesday, closed up nearly 1.1%, approaching the closing high since March 4 set on Tuesday; Alphabet closed up 2.5%, rising for six consecutive days, continuing to refresh the closing high since February 23; Amazon closed up 1.2%, rising for three consecutive days to the closing high since November 2021; Netflix closed up nearly 0.6%, rebounding to a high since March 4, while Meta, which turned up multiple times during the session, fell by over 0.7%, declining for two consecutive days.

Chip stocks overall fell for two consecutive days. The Philadelphia Semiconductor Index and the Semiconductor Industry ETF SOXX fell by about 1.7%, marking the fourth day of decline in the last five trading days, continuously refreshing the closing low since February 29. Nvidia initially fell by over 4.7% at midday, closing down by 3.2% after a surge of over 7% on Tuesday; TSMC's US stocks turned lower at the opening and closed down by nearly 1.8%, AMD fell by nearly 4% for the second consecutive day, Intel fell by over 1%, while Broadcom, which turned up in early trading, rose by over 0.3%.

Nvidia has not hit a new historical high for four consecutive days, with the fourth day of decline in the last five trading days.

AI concept stocks fell across the board, and the concept stocks that surged on Wednesday were not spared. By the close, SoundHound.ai (SOUN), which surged nearly 25% on Wednesday, fell by over 38% at midday; BigBear.ai (BBAI), which surged over 5% on Wednesday, fell by 0.8%; Super Micro Computer (SMCI) fell by nearly 5%; C3.ai (AI) fell by over 4%; Palantir (PLTR) fell by over 2%; Adobe (ADBE) fell by 0.5%. After-hours, Adobe announced second-quarter revenue guidance below expectations, causing the stock price to quickly drop by over 10%.

Popular Chinese concept stocks overall fell for the first time this week. The Nasdaq Golden Dragon China Index (HXC) opened lower and closed down by over 2.7%, falling from the closing high set on November 28, 2023, after four consecutive trading days of gains. Chinese concept ETFs KWEB and CQQQ both fell by over 2%. Among individual stocks, at the close, Bilibili fell by nearly 7%, Nio fell by over 6%, Xpeng fell by nearly 6%, Li Auto fell by over 4%, Alibaba fell by nearly 4%, JD.com fell by over 3%, Baidu fell by 3%, NetEase fell by over 2%, Tencent Music fell by over 1%, while Pinduoduo rose by 0.7%.

Bank stocks indices fell across the board, underperforming the broader market. The overall banking industry index KBW Bank Index (BKX), which rebounded to a high since March 2023 on Wednesday, closed down by 1.8%, falling to a low since March 1; the regional banking index KBW Nasdaq Regional Banking Index (KRX) closed down by nearly 2.8%, falling to a low since February 13, and the regional bank stock ETF SPDR S&P Regional Banking ETF (KRE) The market fell by 2.6%, dropping to its lowest level since March 4th.

Among regional banks, Western Alliance Bancorporation (WAL), Keycorp (KEY), and Zions Bancorporation (ZION) all fell by over 3%, while New York Community Bank (NYCB) remained unchanged after two consecutive days of gains.

In terms of companies that released earnings reports, AI-powered cybersecurity firm SentinelOne (S) dropped by 16.6% as its fourth-quarter EPS loss exceeded expectations, but first-quarter revenue guidance met expectations. Homebuilder Lennar (LEN) fell by 7.6% as first-quarter revenue came in below expectations. Enterprise automation company UiPath (PATH) dropped by 6.9% as first-quarter revenue guidance fell short of expectations. On the other hand, sporting goods retailer DICK’S Sporting Goods (DKS) rose by 15.5% as fourth-quarter earnings and revenue exceeded expectations.

Among the volatile stocks, WW International (WW) fell by 20.4% after reports that a group of lenders had hired lawyers to negotiate debt terms. Under Armour (UAA) dropped by 10.7% after news that founder Kevin Plank would return as CEO, prompting Evercore ISI to downgrade the stock, citing Plank's return as a clear signal of ineffective company strategy. Lithium Americas Corp (LAC) initially surged by over 30% after the US Department of Energy injected $2.26 billion in loans into its Nevada lithium project, closing with a 4.5% gain. Robinhood (HOOD) rose by 5.2% after reporting a 41% year-on-year increase in stock trading volume for February.

Following the release of US PPI data, European stocks also declined. The two-day rally of the pan-European index reversed, with the Stoxx 600 index falling after hitting consecutive closing highs. Most major European indices fell, with Italy and Spain seeing declines after hitting new highs for two and three consecutive days, respectively. The UK stock market, which had risen for three consecutive days to a ten-month high, also retreated. The German stock market continued to move away from its record high, while the French stock market hit a new closing high for the third consecutive day.

In terms of sectors, basic resources, which include mining stocks, fell by 1.5% due to a decline in metal prices. Among individual stocks, Swedish gaming company Embracer dropped by 11.2% during trading after agreeing to sell part of its subsidiary Saber Interactive for $247 million, thereby terminating all operations in Russia. Spanish pharmaceutical company Grifols fell by 9.3% after being downgraded by Fitch and S&P. German power and energy company Encavis surged by 25.2% after private equity firm KKR launched a €2.8 billion takeover bid, making it the best-performing stock in the Stoxx 600 index.

PPI Boosts 10-Year Treasury Yield by Over 10 Basis Points to Two-Week High

The US 10-year benchmark Treasury yield fell below 4.19% during European stock trading and the release of the US PPI, hitting a daily low. After the PPI announcement, it quickly rebounded, surpassing 4.20%. During midday trading, US stocks rose above 4.29%, approaching 4.30%, marking a high since February 29. It surged nearly 11 basis points intraday, closing around 4.29% at the end of the bond market, up about 10 basis points for the day.

The 10-year Treasury yield hit nearly 4.30% during trading, reaching a two-week high.

The 2-year Treasury yield, more sensitive to interest rate prospects, initially dropped below 4.62% after the PPI release, hitting a daily low. It then quickly rose above 4.65%, with US stocks nearing 4.70% in early trading, reaching a high since February 29. It rose about 6 basis points intraday, closing around 4.69% at the end of the bond market, up over 5 basis points for the day. Yields on various maturities of US Treasuries have risen for four consecutive days after falling for four days.

Post-PPI, US Dollar Index Accelerates Rebound to One-Week High, Bitcoin Rises Above $73,700 Before Retreating by $5,000

The ICE US Dollar Index (DXY), tracking the US dollar against a basket of six major currencies including the euro, was below 102.75 in early Asian trading, hitting a daily low. It slightly declined during the day but turned higher, maintaining its upward trend. After the US PPI release, the index continued to expand, surpassing 103.00 before the US stock market opened, with early trading approaching 103.40, reaching a high since March 6 last Wednesday, rising nearly 0.6% intraday.

By the close of the US stock market on Thursday, the US Dollar Index was above 103.30, up nearly 0.6% for the day, rebounding after two consecutive days of stagnation on Wednesday. The Bloomberg Dollar Spot Index, tracking the US dollar against ten other currencies, rose nearly 0.4%, rebounding to a high for the week since March 7, the second day of increase in the last ten trading days.

The US Dollar Index achieved its largest monthly gain, erasing losses since the release of the non-farm payroll report last Friday. Non-US currencies continue to decline overall, with the euro against the US dollar dropping to 1.0880 during the midday trading session, down nearly 0.6% intraday. The British pound against the US dollar approached 1.2730 in early US trading, down 0.5% intraday, both hitting a low since March 7. The Japanese yen has fallen for three consecutive days, with the US dollar against the yen nearing 148.40 during midday trading, hitting a high since March 7, up about 0.4% intraday.

Offshore Chinese Yuan (CNH) against the US dollar rose to a daily high of 7.1916 in early Asian trading, quickly turning lower and maintaining a downward trend overall. After the US PPI data was released, the decline widened, with US stocks falling below 7.20 in early trading, hitting a daily low and dropping 105 points intraday. It continued to fall from the high reached on January 31 after breaking through 7.18 earlier this week. At 4:59 am Beijing time on March 15, the offshore Chinese Yuan against the US dollar was at 7.2026, down 91 points from the New York closing on Wednesday, falling for the third consecutive day after a three-day rise.

Bitcoin (BTC) rose above $73,700 in pre-European trading, hitting a new intraday high for the fourth day this week and the fifth day in seven days. It continued to fall during European trading hours, dropping below $70,000 in midday US trading, briefly falling below $69,000, a decrease of about $5,000 or over 6% from the record high intraday, with US stocks hovering around $70,000 at the close, falling over 4% in the past 24 hours.

Brent crude oil hit a four-month high, with US oil closing above $80 for the first time in four months.

International crude oil futures turned higher before the European trading session and maintained an upward trend. During midday US trading, US WTI crude oil rose above $81.60, up nearly 2% intraday, while Brent crude oil approached $85.70, up nearly 2%. Ultimately, oil prices rose for two consecutive days, easing slightly from the largest daily gain since February 8 seen on Wednesday.

WTI crude oil futures for April, which rose nearly 2.8% on Wednesday, closed up 1.93% at $81.26 per barrel, hitting the highest closing price since November 2, 2023, and closing above $80 for the first time in four months. Brent crude oil futures for May, which rose nearly 2.6% on Wednesday, closed up over 1.65% at $85.42 per barrel, hitting a new high since November 6, 2023, and surpassing the closing high since November 2, 2023, seen on Wednesday.

The futures of gasoline and natural gas in the United States rose together. The NYMEX April gasoline futures closed up by about 1.6%, at $2.7033 per gallon, rising for three consecutive days and hitting a high not seen since September 2023 for the second consecutive day. The NYMEX April natural gas futures, which had fallen for six consecutive days, closed up by 5.00% at $1.741 per million British thermal units, moving away from the low point reached on February 20th. The U.S. Energy Department announced that U.S. EIA natural gas inventories decreased by about 9 billion cubic feet last week, three times more than analysts had expected, becoming the catalyst for the rebound in gas prices on Thursday.

London copper falls from an 11-month high, London tin hits a seven-month high, and gold accelerates its decline after PPI

London base metal futures mostly fell on Thursday. Leading the decline, London nickel fell by nearly 1.5%, continuing to move away from the high point set over four months ago on Tuesday. London copper, which surged over 3% on Wednesday, fell slightly from the high point set in late April last year, and London lead both halted their three-day rise, with London lead stepping back from the high point since the end of January. London zinc, which rebounded to a high point in over two weeks on Wednesday, also fell back. London aluminum continued to fall slightly from the high point since the end of January. Meanwhile, London tin rose for two consecutive days, hitting a seven-month high after closing above $28,000 for the first time since early August last year on Wednesday.

New York gold futures basically maintained a downward trend on Thursday, with the decline expanding after the U.S. PPI was announced. In early trading, U.S. stocks hit a daily low of $2157, dropping by nearly 1.1% during the day, and gold futures closed lower for the second day this week.

COMEX April gold futures closed down by 0.61% at $2167.5 per ounce, giving back most of the gains from the rebound on Wednesday, failing to approach the closing historical high of $2188.60 set for the seventh consecutive trading day on Monday.

The spot gold that rebounded on Wednesday began to fall from the intraday historical high above $2195 reached last Friday, and continued to decline in early Asian trading on Thursday. In early trading, U.S. stocks fell below $2153, dropping by nearly 1% during the day, and closed above $2160 by the end of the trading day, down by about 0.5% during the day.

Spot gold erases the gains from the rebound on Wednesday.