After falling 4%, NVIDIA rebounded by 1%, driving the SPDR S&P 500 to a new high, while the Japanese yen suffered a defeat, hitting a four-month low

On Tuesday, March 19, the two-day Federal Open Market Committee (FOMC) monetary policy meeting of the Federal Reserve opened. The market bets that the interest rate policy will remain unchanged as a "foregone conclusion." Due to unexpected inflation rebound, interest rate swap pricing shows that traders' bets on a rate cut in June are now less than 50%.

Some analysts believe that the interest rate path "dot plot" and quarterly economic outlook will help shape this year's rate cut prospects. Whether the balance sheet policy will be adjusted may also provide signals, making this meeting crucial. Some believe that the Fed's tone may be slightly hawkish.

Wall Street's expectations for the number of Fed rate cuts this year have cooled significantly since the beginning of the year.

Mark Cabana, head of U.S. rate strategy at Bank of America Global Research, believes that if the dot plot suggests only two rate cuts this year, the two-year U.S. Treasury yield may decline by 10 basis points, the U.S. dollar will rise, and risk assets will come under pressure. If the rate cuts remain unchanged at three times, the two-year U.S. Treasury yield will rise by 5 basis points, the U.S. dollar will weaken, and the rise in risk assets will continue.

U.S. February housing starts exceeded expectations, rising to 1.521 million households, the highest since August last year, with a month-on-month increase of 10.7%. Forward-looking indicators for building permits also exceeded expectations, and January data were revised upwards, indicating that the market's expectations of Fed rate cuts this year have boosted the housing market.

The Bank of Japan has made a historic shift, ending its negative interest rate and yield curve control policies, raising interest rates for the first time in seventeen years, and canceling most of its asset purchase quantitative easing plan. This caused the Japanese yen to plunge below the 150 level against the U.S. dollar, a level that had led Japan to intervene in the foreign exchange market last year.

S&P 500 rebounds in the afternoon, hitting a new high, Dow rises the most in three weeks, NVIDIA falls nearly 4% then rises 1%

On Tuesday, NVIDIA's GTC developer conference, known as the AI feast, continued. Due to NVIDIA's opening drop of about 3% dragging down the performance of technology and chip stocks, the major U.S. stock indices, dominated by traditional industries, opened higher, with the S&P index and Nasdaq both falling, with the Nasdaq falling more deeply.

However, before noon, the S&P 500 index turned higher than the Nasdaq, and NVIDIA also rebounded by 1% after falling nearly 4%, driving the rise in U.S. stock indices, closing at daily highs. The Nasdaq completely erased its 0.9% decline and returned above 16,000 points, while the Dow rose 320 points and broke through 39,000 points.

At the close, U.S. stock indices rose for the second consecutive day, with the S&P hitting a new closing high, the Dow reaching its highest level in over three weeks since February 23 and the largest gain since February 22, and the Nasdaq 100 rising above 18,000 points, with both the Nasdaq and the Dow hitting their highest levels since March 13:

The S&P 500 index rose by 29.09 points, or 0.56%, to 5178.51 points. The Dow rose by 320.3 points, or 0.83%, to 39110.76 points. The Nasdaq rose by 63.34 points, or 0.39%, to 16166.79 points The Nasdaq 100 rose by 0.26%, with the Nasdaq Technology Market Capitalization Weighted Index (NDXTMC) measuring the performance of technology stocks in the Nasdaq 100 closing up by 0.25%, completely recovering from the decline since last Thursday.

The Russell 2000 small-cap index turned up by 0.5%, moving away from the lowest point since February 23. The "fear index" VIX fell by over 3% and dropped below 14.

The S&P and Nasdaq rebounded in the afternoon, with the S&P hitting a new high and the Dow posting its largest gain in three weeks.

Star tech stocks rebounded in the afternoon. "Metaverse" Meta fell by over 3% before closing down by 0.2%, Tesla fell by 3.7% before closing down by 1.4%, Google A fell by 0.4% missing a five-week high; Apple rose by 1.4% to its highest since March 1; Amazon rose by 0.8%, Microsoft rose by about 1%; Netflix fell by 1.7% before turning up by 0.4%, reaching the highest since the end of 2021.

Chip stocks also narrowed their losses after the midday. The Philadelphia Semiconductor Index fell by 2.9% before closing down by 0.9%, marking a five-day decline to the lowest in two weeks since February 28. Nvidia fell by 3.9% before closing up by 1.1%, Nvidia's double long ETF fell by 8% before closing up by about 2%; Intel fell by about 3% before halving its losses, AMD fell by about 7% before closing down by nearly 5%, Qualcomm fell by 1.7%, TSMC's US stock fell by 2.6% before closing down by 1.3%.

AI concept stocks moved away from the initial general decline. Adobe rose by 1.4% continuing to move away from an eight-month low, Oracle turned up by 1%, hitting a new high for two consecutive days. Super Micro Computer, which was just included in the S&P 500 this week and issued 2 million shares or $2 billion, fell by 13.8% before closing down by about 9%, marking a four-day decline to a two-week low. Palantir fell by over 4% before closing down by 0.8%, C3.ai fell by over 4% before closing down by 2.6%, SoundHound.ai fell by 7.8% before turning up by 1%, approaching a two-year high again, BigBear.ai fell by 9% before closing down by 0.5%.

On the news front, Nvidia CEO Jensen Huang stated that software will be a very large business, expecting a $250 billion market opportunity for data centers annually, and Nvidia will gain a larger market share. His emphasis on the ecosystem after software integration has boosted the stock price Analysts believe that NVIDIA did not provide any additional "surprises" besides launching the new generation of the most powerful AI chip, Blackwell GB200, leading investors to take profits. However, Wall Street remains optimistic about the stock, with Goldman Sachs raising its price target for NVIDIA to $1000.

Chinese concept stocks narrowed their losses at the close. The ETF KWEB, which fell 1.4%, closed down 0.3%, CQQQ fell 1.6% and closed down 0.7%, the Nasdaq Golden Dragon China Index (HXC) fell 1.7% and closed down 0.6%, marking a four-day decline to refresh the weekly low.

Among popular stocks, JD.com fell 0.9%, Baidu fell 0.6%, Pinduoduo fell 0.8%; Alibaba fell 0.9% and closed down 0.1%, Tencent ADR fell 0.8%, Bilibili nearly erased a 2.5% decline, Nio fell 6.3%, Li Auto fell 0.9%; XPeng, which narrowed its net loss in the fourth quarter, rose 7% and closed up 0.7%, EHang Intelligent rose over 15%, and Tencent Music, with a year-on-year increase of over 20% in paid users in the fourth quarter, rose over 6%.

In bank stocks, the industry benchmark Philadelphia Stock Exchange KBW Bank Index (BKX) rose 0.2%, rebounding for three days from the monthly low, the KBW Nasdaq Regional Bank Index (KRX) narrowed its gains to 0.4%, but New York Community Bank (NYCB) fell over 3% to a weekly low.

Other stocks with significant changes include:

In the field of medical AI, Novo Nordisk and NVIDIA jointly built a super AI computer, but its European stocks fell over 1.8%, and its US stocks fell over 1%.

Cryptocurrencies fell across the board, causing a sharp decline in digital currency exchanges and mining stocks. The largest holder of Bitcoin, MicroStrategy, fell by 18% at one point, Coinbase fell by nearly 10% at one point, and Riot Platforms fell by over 8% at one point.

US luxury department store Nordstrom rose 14% and closed up over 9%, with the founding family requesting investment banks such as Morgan Stanley to explore private equity discussions again after 2018.

European stocks of consumer goods giant Unilever rose nearly 6%, and US stocks rose nearly 3%. The restructuring plan involves splitting the ice cream division and laying off 7,500 employees.

European stocks rose, with Italian and Spanish indices rising nearly 1% to lead the national indices. The pan-European Stoxx 600 index rose 0.26% off a weekly low, having fallen for three consecutive days from historical highs, with automotive stocks rising by about 1%. German, French, and Spanish indices returned to record highs at the close, and the Italian bank index rose over 1.8%.

US Treasury yields down about 5 basis points, 10-year benchmark yield falls from nearly four-month high

On the eve of the Federal Reserve's decision, US Treasury yields collectively declined. The two-year yield, which is more sensitive to monetary policy, fell by about 5 basis points and dropped below 4.70%, moving away from a three-week high. The 10-year benchmark yield fell the most by 6 basis points to 4.28%, after hitting a high of 4.35% yesterday, the highest since the end of November last year.

US Treasury yields collectively declined on the eve of the Federal Reserve's decision

The 10-year German bund yield, a benchmark in the Eurozone, fell by 1 basis point, while the two-year yield dropped by over 3 basis points. Both the 10-year and two-year UK gilt yields fell by around 3 basis points. However, the yields of peripheral countries such as Italy and Greece rose.

As Japanese investors are significant holders of Eurozone government bonds, some analysts are concerned that if Japan ends its negative interest rate policy, funds may flow back domestically, thereby increasing borrowing costs in Europe. Nevertheless, the trend of Eurozone bond yields is still dominated by the European Central Bank's interest rate decisions, with some policymakers reiterating expectations of rate cuts starting in June, ultimately pushing down yields.

Oil prices stay at five-month highs for two consecutive days, Brent crude closes above $87, WTI rises by nearly 1%

Positive demand signals, the extension of the OPEC+ production cut agreement to the second quarter, and expectations of demand boosted by interest rate cuts by central banks in Europe and the US continue to support oil prices. UBS stated that the attack on Russian energy infrastructure by Ukraine could reduce Russian crude oil production by up to 300,000 barrels per day.

WTI crude oil futures for April closed up $0.75, or 0.90%, at $83.47 per barrel, while Brent crude futures for May closed up $0.49, or 0.6%, at $87.38 per barrel, both reaching their highest levels in about five months since late October last year.

Oil prices stay at five-month highs for two consecutive days

The more actively traded WTI May futures rose by nearly $1 or 1.2% in intraday trading, briefly surpassing $83, reaching the highest level in over four months since early November last year. International Brent crude rose by 0.9%, closing above $87 for the first time since late October last year.

The TTF Dutch natural gas futures, a European benchmark, rose by 0.3%, surpassing 29 euros per megawatt-hour, initially turning lower after opening higher. ICE UK natural gas rose by around 0.9%, while US natural gas futures rose by nearly 4% before halving the gains, with colder weather in the next two weeks boosting heating demand The US Dollar Index hit a two-week high, the Japanese Yen fell below 151 to a four-month low, and Bitcoin briefly dropped below $63,000.

The basket of currencies measuring against the US Dollar Index (DXY) rose by 0.6% to break through the 104 level, reaching a two-week high since March 1. It has risen by about 2% this year, as the US economy has performed better than expected, leading investors to no longer bet on a rapid and substantial rate cut by the Federal Reserve.

The Euro and the British Pound both continued to hit lows not seen since March 6 against the US Dollar. The Japanese Yen fell by over 1% and briefly dropped below 151, hitting a four-month low since November last year. The offshore Chinese Yuan slightly declined against the US Dollar and fell below 7.21 yuan, continuing to hover around a one-and-a-half-week low.

Analysts suggest that despite the Bank of Japan's historic exit from ultra-loose monetary policy leading to a decline in the Yen, this decision was in line with market expectations and did not signal further interest rate hikes. The significant interest rate differential between Japan and the US will continue to put pressure on the Yen. Meanwhile, the Reserve Bank of Australia kept interest rates unchanged and downplayed the possibility of further rate hikes, causing the Australian Dollar to fall to a two-week low.

Major cryptocurrencies experienced a general decline. The largest cryptocurrency, Bitcoin, fell by 7% and dropped below $63,000, with intraday losses approaching half and rebounding to over $64,000, still hitting a two-week low. The second-largest cryptocurrency, Ethereum, fell by nearly 10% and dropped below $3,200.

At its intraday low, Bitcoin fell by over $10,000 from the historical high set last week. However, the Japanese government's pension fund, the world's largest pension fund, is gathering basic information on "illiquid assets" such as Bitcoin, and may consider including them in its investment portfolio.

Spot gold approached a one-week low, with London Zinc falling by 4.4%, losing its seven-month high, and London Copper and Zinc falling by over 1%.

The market is awaiting clues on inflation and interest rate paths from the Federal Reserve meeting on Wednesday. COMEX April gold futures closed down by 0.21% at $2,159.70 per ounce. COMEX May silver futures closed down by 0.51% at $25.135 per ounce.

The rise in the US Dollar also weighed on gold prices. Spot gold fell below $2,160, dropping by 0.6% and approaching the one-week low set during Monday's trading session, when gold hit a near-historical high of nearly $2,195 on March 8 London industrial base metals generally fell, with only London lead slightly up. The economic barometer "Dr. Copper" fell by $112 or more than 1.2%, breaking below the $9,000 mark, having risen above $9,160 in yesterday's session to hit an 11-month high. London zinc fell for two consecutive days by more than 1%, London nickel fell by nearly $480 or 2.7%, London tin fell by more than $1,200 or 4.4%, marking the first decline in five days and breaking below a seven-month high