Powell further dampens rate cut expectations, US bonds hit new lows, US dollar jumps, gold still hits new highs, S&P Nasdaq rebound fails, Dow ends six consecutive declines

Federal Reserve Chairman Jerome Powell "hawkish" on Tuesday, stating that recent data shows, "So far this year, there has been no further progress in inflation falling to the Fed's target of 2%." Powell hinted that the Fed may keep the current policy rate, which is at a high level for over twenty years, for longer, stating that recent data "clearly did not" boost the Fed's confidence in lowering inflation, and it may take longer to gain more confidence.

Powell's remarks on inflation further weakened the market's bets on a Fed rate cut. After his speech, U.S. Treasury prices accelerated their decline, with yields widening. The yield on the two-year U.S. Treasury, sensitive to interest rates, broke through the 5.0% mark again after last Thursday, hitting a high not seen since November last year, while the benchmark ten-year U.S. Treasury yield approached the high set earlier on Thursday, the highest in five months.

Market expectations for the total rate cut by the Fed this year are approaching 40 basis points! The market expects the probability of a rate cut by the Fed in June to be less than 20%, and the probabilities of rate cuts in September and December are both below 50%.

After Powell's speech, the two major U.S. stock indexes, the S&P and Nasdaq, saw their declines widen slightly, while the Dow maintained its gains, benefiting from the surge of healthcare giant UnitedHealth, which reported revenue growth exceeding 8% in the first quarter. Some tech giants continued to decline, dragging down the market, while chip stocks rebounded, with Nvidia and AMD, which released AI PC chips, both rising over 2% during the day. However, Tesla continued to decline after reports of a global workforce reduction of over 10%, and Apple fell over 2% for the second consecutive day after research data showed a sharp drop in iPhone shipments by nearly 10% in the first quarter.

The release of earnings reports by Wall Street giants failed to boost the market, with Morgan Stanley rising nearly 5% at one point with first-quarter net profit exceeding expectations by 14% and revenue also exceeding expectations, while U.S. bank stocks plummeted as Bank of America, with first-quarter net profit down 18% and high deposit costs dragging down important revenue source net interest income (NII), saw a 3% year-on-year decline in its stock price, marking the largest intraday drop since the closure of a Silicon Valley bank over a year ago In the foreign exchange market, after Powell commented on the insufficient progress of inflation, the US dollar index quickly rose to a new high in five months, and the Japanese yen continued to hit new lows since 1990. Comments pointed out that in the early trading session, the Japanese yen rebounded by about 0.5% in just a few minutes, which may be a result of traders becoming more sensitive to the risk of Japanese government intervention, rather than an official action. Strategists warned that the urge to bottom fish the Japanese yen remains strong, and when the Japanese yen approaches the milestone level of 155 against the US dollar, the sudden rebound of the yen will be more sensitive. Bitcoin continued to decline, falling below $62,000 during the session, approaching the over three-week low set near $61,000 after the weekend Iran attacked Israel, but the decline eased compared to Monday.

In the commodity market, as the US dollar strengthened, London copper, which rose on Monday after the UK and US imposed sanctions on Russian metal trading, fell back, while London aluminum barely maintained its upward momentum. Geopolitical risks continued to support gold, but the strength of the US dollar limited the rise in gold prices. New York gold futures continued to hit new closing highs but still failed to refresh the intraday record high. Comments stated that if the Middle East conflict de-escalates, the market focus will shift to the Federal Reserve, and it is clear that the Fed will not cut interest rates quickly, which would be bearish for precious metals gold and silver. International crude oil failed to rebound successfully amid geopolitical risks, closing lower for consecutive days. US Treasury Secretary Yellen stated that the US will impose new sanctions on Iran in the coming days. Comments suggested that this may weaken Iran's ability to export oil, and meanwhile, the third meeting of Israel's wartime cabinet within three days seems to be postponed for a day, scheduled for Wednesday, as Western countries hope that sanctions against Iran will help prevent a serious escalation of the Middle East situation.

S&P 500 falls for three consecutive days, Tesla leads the decline in the "Seven Sisters of Technology", chip stocks rebound, Morgan Stanley rises after earnings, Bank of America falls

The three major US stock indexes fluctuated at the opening and intraday. The S&P 500 index, which opened slightly higher, turned lower in early trading, falling by over 0.4% when hitting a new daily low in the morning session. After Powell's speech at noon, it briefly turned higher to hit a new daily high, rising nearly 0.4% during the day, but quickly turned lower and approached the daily low again. The Nasdaq Composite Index, which opened lower, fell by nearly 0.4% when hitting a new daily low in the morning session, then turned higher multiple times. After Powell's speech, it turned higher to hit a new daily high, rising by 0.5% during the day, then turned lower again and approached the daily low. Both the S&P and Nasdaq turned lower towards the end of the session after briefly turning higher. The Dow Jones Industrial Average maintained its upward trend throughout the day, hitting a new daily high shortly after the opening, rising by nearly 260 points or nearly 0.7% during the day. It had risen by less than 40 points in the morning session, and after Powell's speech at noon, the decline narrowed to over 20 points, hitting a new daily low, before the gain expanded to over 100 points.

In the end, only the Dow closed higher among the three major indexes, ending a six-day losing streak, while the S&P and Nasdaq fell for three consecutive days, with the S&P not falling by more than 1% on the first day. The Dow rose by 63.86 points, or 0.17%, to 37,798.97 points, moving away from the closing low since January 18. The S&P fell by 0.21% to 5,051.41 points, and the Nasdaq fell by 0.12% to 15,865.25 points, both hitting new closing lows since February 21 for two consecutive days Value stocks dominated the small-cap Russell 2000 index, which fell by 0.42%, underperforming the broader market, marking a third consecutive day of decline and hitting a two-day low since February 13. The tech-heavy Nasdaq 100 index rose by 0.04%, temporarily moving away from the lows set on February 21 after two consecutive days of over 1% declines. The Nasdaq Technology Market Cap Weighted Index (NDXTMC), which measures the performance of tech stocks in the Nasdaq 100 index, rose by 0.26% after hitting a low on Monday since March 15.

Among the three major US stock indices, only the Dow closed higher, with the S&P and Nasdaq turning lower in the final trading session, while small-cap indices underperformed the broader market.

In the Dow component stocks, UnitedHealth (UNH) led the gains, rising nearly 7.7% at the opening and closing up by 5.2%. Cloud software giant Salesforce (CRM), which fell over 7% on Monday, rose over 2% at midday and closed up by nearly 1.7%, following UNH in gains. Johnson & Johnson (JNJ), which reported first-quarter revenue in line with expectations and profits higher than expected, fell by 2.1%, leading the declines, with Apple following closely behind.

Among the major sectors in the S&P 500, only the IT sector, with chip stocks rising by over 0.2%, did not close lower. Consumer staples, healthcare with UnitedHealth, and other sectors rose by less than 0.1%. Real estate, sensitive to interest rates, led the declines with over a 1.5% drop, followed by utilities with nearly a 1.4% decline, while other sectors fell by less than 0.9%.

Tech giants including Microsoft, Apple, Nvidia, Google's parent company Alphabet, Amazon, Meta (Facebook's parent company), and Tesla saw mixed movements. Tesla, which plunged by 5.6% on Monday, marking its largest decline since January 25, continued to lead the declines for two consecutive days, falling by nearly 4.8% at the opening, over 3% at midday, and closing down by 2.7%, marking a three-day decline and hitting a closing low since April 26, 2023.

Among the FAANMG six major tech stocks, Apple only briefly turned higher in the morning session, falling by over 2.5% at midday, over 2% in two days, and closing down by 1.9%, approaching the low set on October 26, 2023. Alphabet fell by 0.3%, marking a three-day decline to a low since April 5. Amazon closed down by nearly 0.2%, falling for three consecutive days and hitting a two-day low since April 4. Meta closed down by less than 0.1%, hitting a two-day low since April 2. Meanwhile, Microsoft and Netflix maintained their upward momentum throughout the day, with Microsoft closing up by 0.2% after hitting a low since March 11 on Monday, and Netflix closing up by 1.7% after hitting a low since March 15 on Monday The overall rebound of chip stocks, the Philadelphia Semiconductor Index and the semiconductor industry ETF SOXX turned down in early trading, with a midday rise of over 1% and closing up nearly 0.9% and 0.8% respectively, breaking the two-day decline and refreshing the closing low since February 28. Among chip stocks, Nvidia maintained an upward trend all day on Monday, approaching the closing low since March 11 created on last Tuesday, rising over 2% at midday and closing up 1.6%; AMD, which launched its first commercial AI-enhanced desktop chip and strengthened its presence in the AI PC field, also rose over 2% at midday and closed up nearly 2%; Broadcom closed up over 1%, Micron Technology rose 0.3%, while Intel, which fell over 1% in early trading, closed down more than 0.1%, and TSMC's US stock fell 0.2%.

Tesla, Nvidia, and other seven major technology stocks saw a significant easing of the decline on Tuesday compared to Monday.

Banking stocks fell across the board. The overall banking industry index KBW Bank Index (BKX) closed down 1.6%, falling back to the closing low since March 1 after rebounding on Monday; the regional banking index KBW Nasdaq Regional Banking Index (KRX) closed down nearly 1.4%, the regional banking stock ETF SPDR S&P Regional Banking ETF (KRE) closed down nearly 1.3%, declining for three consecutive days, refreshing the closing low since November 28, 2023, and November 30, 2023, respectively.

Among the major banks, after announcing their financial reports, Morgan Stanley rose over 4.7% in early trading, closing up nearly 2.5%, Bank of America quickly turned down in early trading, falling about 5% in the morning, marking the largest intraday decline since March 2023, and closing down 3.5%; at the close, Citigroup fell 2.6%, JPMorgan Chase fell 1.1%, Goldman Sachs, which rose nearly 3% after announcing its financial report on Monday, fell nearly 1%, and Wells Fargo also fell nearly 1%.

Popular Chinese concept stocks continued to decline overall, underperforming the broader market. The Nasdaq Golden Dragon China Index (HXC) closed down nearly 1.3%, declining for two consecutive days, refreshing the closing low since February 13. Chinese concept ETFs KWEB and CQQQ closed down about 1.5% and 1.8% respectively. New energy vehicle companies fell across the board, with Xiaomi down nearly 2%, Nio down over 2%, Li Auto down nearly 0.7%, and XPeng down 0.4%. Among other individual stocks, at the close, the caviar product supplier Richemont Group ADR (TWG) fell 51.50% on its first day of listing in the U.S., Bilibili fell over 2%, NetEase fell nearly 2%, Alibaba, JD.com fell over 1%, Pinduoduo fell nearly 0.7%, Tencent fell 0.2%, and Baidu fell less than 0.1% After the media reported that the US Department of Justice will file an antitrust lawsuit against it, entertainment company Live Nation Entertainment (LYV) fell more than 9% in early trading and closed down nearly 7.6%; while United Airlines (UAL), which closed up 1.1%, announced in after-hours trading that its first-quarter EPS loss was lower than expected, revenue was higher than expected, and second-quarter profit guidance was higher than expected. The stock price surged after hours, rising more than 6% at one point.

In Europe, concerns about high interest rates and escalating conflicts in the Middle East have dampened investor sentiment, causing a sharp retreat in the broad European stock indices that rebounded for two consecutive days. The STOXX 600 index in Europe fell by more than 1.5%, marking the largest daily decline since July 5, 2023, and hitting the lowest closing level since March 6. Major European stock indices all fell, with at least a 1% decline, led by the nearly 2% drop in the UK stock index, which has fallen for two consecutive days. The German and French stock indices, which rebounded on Monday, as well as the Italian and Spanish stock indices, which rose for two consecutive days, all retreated.

In terms of sectors, the basic resources sector, which was affected by the decline in copper prices, fell by about 3%, marking the largest drop since mid-August last year. The banking sector fell by about 2.5%, also marking the largest drop since August last year, with the UK's largest bank HSBC and the eurozone's largest bank BNP Paribas both falling by nearly 3%.

After Powell's speech, the 2-year US Treasury yield rose above 5.0% to a five-month high.

The yield on the 10-year benchmark US Treasury bond hit a new high for the fourth time in the past five trading days since November last year, with the US stock market initially testing above 4.70%. It hit a high for the second consecutive day since November 13, 2023, rising more than 9 basis points intraday. The increase narrowed in the morning session, dropping below 4.65% at one point. After Powell's speech at noon, the increase widened again, rising above 4.69% at one point, approaching the high set in the early trading session. By the end of the bond market session, it was around 4.67%, up about 7 basis points intraday, rising for two consecutive days, and climbing for the fourth consecutive trading day in the past five days.

The overall yield of various maturities of US Treasury bonds has risen for two consecutive days, with the yield of short-term bonds relatively lagging behind.

The 2-year US Treasury yield, which is more sensitive to interest rate prospects, rose above 4.73% in early US stock trading, briefly dropping below 4.95% in the morning session. After Powell's speech at noon, the increase rapidly expanded, rising above the psychological barrier of 5%, reaching a high not seen since November 14, 2023, when it rose above 5.0% last Thursday. It rose more than 8 basis points intraday, reaching around 4.99% by the end of the bond market session, up about 7 basis points intraday, rising for two consecutive days after falling for two days The two-year US Treasury yield rose above 5.0% intraday, hitting a new high since November last year.

The US dollar index hit a five-month high again, with the largest five-day gain in a year and a half. The Japanese yen hit a new low since 1990 for the fifth consecutive day.

The ICE US Dollar Index (DXY), which tracks the exchange rate of the US dollar against a basket of six major currencies including the euro, fell below 106.10 after a decline in European stock trading, hitting a daily low. It fell more than 0.1% during the day. Before the US stock market opened, it briefly turned lower after turning higher, and then rose above 106.50 after Powell mentioned a lack of progress in declining inflation at midday. It hit a high since November 1, 2023 for two consecutive days, hitting a new high for the fifth consecutive day in five months, rising nearly 0.3% intraday.

By the time the US stock market closed on Tuesday, the US dollar index was below 106.40, rising nearly 0.2% during the day. The Bloomberg Dollar Spot Index, which tracks the US dollar against other ten currencies, rose nearly 0.4% intraday, hitting a high since November 2023 for the fourth consecutive day, along with the US dollar index, both rising for five consecutive days, marking the largest five-day gain since October 2022.

In the non-US currency market, the Japanese yen continued to hit a new low since 1990 intraday. The US dollar against the Japanese yen approached 154.80 after Powell's speech in the afternoon, hitting a new high since 1990 for the fourth consecutive trading day, rising over 0.4% intraday. The euro against the US dollar briefly tested 1.0600 after Powell's speech, hitting a low since late October 2023 for three days, falling nearly 0.2% intraday. By the time the US stock market closed, it hovered around 1.0620, roughly unchanged from Monday. The British pound against the US dollar fell below 1.2410 after Powell's speech, hitting a low since November 17, 2023 created last Friday, falling 0.3% intraday. By the time the US stock market closed, it fell by about 0.1%.

Offshore Chinese Yuan (CNH) against the US dollar hit a daily high of 7.2589 in the Asian market, dropping to 7.2831 in early trading, hitting a low since November 13, 2023. It fell by 241 points intraday, then rebounded after shaking, with US stocks recovering to 7.27 in early trading. By the time the US stock market closed, the intraday decline narrowed to less than 40 points. At 4:59 am Beijing time on April 17, the offshore Chinese Yuan against the US dollar was reported at 7.2644 yuan, down 54 points from the New York closing on Monday, equivalent to a narrowing of the intraday decline by 187 points from the daily low. It fell back after rebounding on Monday Bitcoin (BTC) rose above $69,300 in the Asian morning session, hitting a daily high, but fell below $61,800 during the European stock session to set a new daily low. It dropped below $61,000 over the weekend, with some platforms falling below $60,900, approaching the low near March 20, falling over $2,000 from the daily high, a drop of over 3%. It later rebounded, rising above $63,000 in the pre-market session of the US stock market. However, in the early trading session, it dropped to $62,000 again and briefly approached the daily low. At midday, it rose above $63,000 again, closing above $62,700 at the end of the US stock market, with a drop of over 1% in the last 24 hours.

Crude Oil Rebound Fails, Two Consecutive Drops

International crude oil futures fell during the trading session. When setting a new daily high in the Asian session on Tuesday, US WTI crude oil approached $86.20, rising nearly 0.9% intraday, breaking above $90.80. Brent crude oil rose over 0.8% intraday. However, after turning lower in the pre-European stock session and setting a new daily low before the US stock market session, US oil fell below $84.80, while Brent oil approached $89.40, both falling nearly 0.8% intraday. The US stock market saw multiple short-term rebounds during the trading session.

Ultimately, crude oil, which rebounded last Friday, saw two consecutive days of decline. WTI May crude oil futures fell by $0.05, a decrease of nearly 0.06%, to $85.36 per barrel, continuing to fall towards the closing low set on April 1 since last Thursday. Brent June crude oil futures fell by $0.08, a drop of about 0.09%, to $90.02 per barrel, barely holding above the $90 mark, closing above $90 for two consecutive days.

US WTI crude oil fluctuated several times during the session, ending with a slight decline.

London Copper Falls Over 1%, Ending Two-Year Highs; London Aluminum Hits 14-Month High, Gold Sets Four-Day Record High

London base metal futures mostly fell on Tuesday, as the rally sparked by the US and UK imposing trading bans on some Russian metals subsided. London copper, lead, and tin all fell by over 1%. Copper and lead, which had risen for two consecutive days, fell from their highs since June 2022 and November last year, respectively, while tin continued to fall from the high set after the rebound last Friday since June 2022. Zinc, which had risen for five consecutive days to highs since April last year, fell for two days, and nickel, which rebounded on Monday, fell to a low of over a week. Aluminum, which led the gains with over 2% on Monday, rose slightly, rising for three consecutive days to a new high since February last year.

New York gold futures maintained their upward trend on Tuesday, briefly turning lower in the pre-European stock session and early US stock session. The US stock market rose to $2,414.8, a daily high, rising over 1.3%, but still below the intraday historical high of $2,448.8 set last Friday. Spot gold rose above $2,398 in the early US stock session to set a new daily high, rising over 0.6% intraday, still not close to the intraday historical high above $2,431 set last Friday Spot gold showed a significant easing of gains compared to Monday, failing to hit a new historical high during intraday trading.

However, both gold futures and spot gold continued to set new closing record highs. COMEX June gold futures closed up 1.04% at $2407.8 per ounce, rising for the fourth consecutive trading day and setting a new closing record high for four days in a row. At the close of the U.S. stock market, spot gold was slightly below $2390, up nearly 0.3% intraday, continuing to set new record highs compared to the same period last Thursday