The Federal Reserve saves US bonds, US stock indexes surge during the day, tech stocks weigh down the market, Nvidia falls by nearly 4%, AMD plunges 14% after earnings, and AMD falls by 9%

On Wednesday this week, the monetary policy decision announced by the Federal Reserve (Fed) as reported here kept interest rates unchanged as expected by the market, and slowed down the pace of quantitative tightening (QT), exceeding expectations by more than half in reducing the scale of the reduction of US Treasury bonds. Although the decision statement warned of a lack of progress in recent inflation declines, Fed Chairman Powell played the role of the "savior" of US bonds.

Before the Fed decision day, there was a strong bearish sentiment in the bond market, with market participants expecting Powell to release a hawkish stance, reiterating no rush to cut interest rates, and acknowledging the recent deterioration in inflation prospects. However, during the post-meeting press conference, Powell explicitly stated that the next interest rate action is "unlikely" to be a rate hike. Commentators noted that Powell's exclusion of the possibility of a rate hike eased investors' concerns about sticky inflation.

Commentators believe that the basic message conveyed by the Fed is that rate cuts have been postponed but have not deviated from the path of rate cuts. The Fed may lack confidence in rate cuts but has not considered rate hikes. The Fed's decision statement this time is dovish, and the plan to slow down the reduction of the balance sheet is positive for the bond market. Powell's press conference showed that he believes monetary policy is restrictive. If policy is restrictive, then the focus should be more on the risk of economic growth downturn rather than the risk of inflation rising.

After the Fed meeting, the market's expectations for one to two rate cuts by the Fed this year rose to about 50%, and the probability of two to three rate cuts next year also rose to about 50%.

Before the Fed's important decision, bond and stock market investors showed restraint in response to economic data such as the April "small non-farm" ADP private sector employment as reported here and the US Treasury's expected new season's refinancing issuance size. The prices of US Treasury bonds, which had their worst performance in 14 months in April, rebounded slightly and yields fell. The two major stock indexes, S&P and Nasdaq, continued to decline, with volatility easing compared to Tuesday.

After the Fed announced its decision, the S&P and Nasdaq turned higher, US bond prices surged, and during Powell's speech, the three major US stock indexes rose by more than 1%, while US bond yields accelerated their decline. The yield on the two-year US Treasury bond, sensitive to interest rates, fell below 5.0%, dropping more than 10 basis points from the five-month high reached after rising above 5.0% on Tuesday. However, US stocks failed to hold onto their gains, and after Powell's press conference, the S&P and Nasdaq returned to a downward trend, with the Dow giving up most of its gains. The overall market was pressured by some tech stocks such as Nvidia During the midday trading session, after Powell stated that the next interest rate move "impossible" is a rate hike, US stocks and gold rose, the US dollar accelerated its decline, and US bond yields accelerated their plunge.

Financial reports significantly impacted industry leaders: AMD, whose AI chip sales outlook for this year did not meet market expectations, dropped by 10% at one point; AI "unicorn" Supermicro, whose third-quarter revenue fell below expectations, opened more than 10% lower, dropping nearly 19% intraday; Starbucks, with unexpected same-store sales decline in the second quarter and a downward revision of its 2024 fiscal year guidance, dropped nearly 18% intraday; Amazon, with first-quarter profits growing more than expected and cloud business accelerating growth for two quarters, rose nearly 6% intraday, supporting the Dow's rebound; Pfizer, with first-quarter revenue higher than expected and an upward revision of full-year profit guidance, rose over 7% intraday. Chinese concept stocks rebounded overall, with Nio, whose April delivery volume doubled compared to the same period last year, surged over 10%.

In the foreign exchange market, after Powell's speech, the US dollar index accelerated its decline from near the five-month high set two weeks ago during the Asian trading session, with non-US currencies generally rising. The Japanese yen suddenly surged after the US stock market closed, rising more than 3% from the intraday low, following a suspected intervention by the Japanese government on Monday, and experiencing a second day of sharp rise this week, with the USD/JPY pair nearly falling below 153.00, far from the high above 160 reached in 1990 before the sharp drop on Monday.

Commodities performed differently, with gold accelerating its rebound after Powell's speech as the US dollar and US bond yields accelerated their decline, with both spot gold and New York gold futures expanding their intraday gains to over 1%. Amid ceasefire negotiations between Israel and Hamas, US crude oil inventories unexpectedly surged, signaling bearish demand, leading to an accelerated decline in international crude oil prices, with US oil falling below $80 per barrel and Brent crude hitting new lows since early March, both dropping over 3% in a day for the first time in two weeks, marking the worst single-day performance since Saudi Arabia unexpectedly cut crude oil prices nearly four months ago. The US Energy Information Administration (EIA) reported a weekly increase of over 7.2 million barrels in US crude oil inventories, the largest weekly increase since February, with gasoline inventories increasing by over 300,000 barrels last week, while analysts expected a decrease of over a million barrels.

S&P 500 falls for two consecutive days, after Powell's speech, the three major US stock indexes all rose by over 1%, Chinese concept stocks rebounded, and Nio announced its delivery volume, closing up nearly 12% after

The three major U.S. stock indexes fluctuated at the opening, with mixed movements. At midday, they all rose together. The S&P 500 Index and the Nasdaq Composite Index opened lower. At midday, when hitting a daily low, the S&P fell by over 0.4% and the Nasdaq fell by over 0.6%. After the Federal Reserve announced its decision at midday but before Powell began speaking, both indexes turned upwards. During Powell's speech, the indexes accelerated their rise. When hitting a daily high, the Nasdaq rose by 1.7% and the S&P rose by 1.2%. The Dow Jones Industrial Average, which opened high, briefly turned downwards at the beginning of the day, but its gains expanded at midday. After Powell's speech, it surged over 530 points, up by over 1.4%.

At the end of the day, after Powell's press conference, the three major indexes fell back. The S&P and Nasdaq turned downwards again, with only the Dow closing higher, up by 87.37 points, about 0.23%, at 37903.29 points, temporarily leaving behind the nearly 1.5% decline on Tuesday and hitting the low since the close on April 19. The S&P closed down by 0.34% at 5018.39 points, hitting a low since the 1.57% decline on Tuesday on April 22. The Nasdaq, which fell by about 2% on Tuesday, closed down by 0.33% at 15605.48 points, marking the second consecutive day of decline for both the Nasdaq and the S&P.

The Nasdaq 100 Index, which is dominated by technology stocks, closed down by 0.7%, marking the second consecutive day of decline for both the Nasdaq and the S&P since the low on April 22. The Nasdaq Technology Market Cap Weighted Index (NDXTMC), which measures the performance of technology stocks in the Nasdaq 100 Index, closed down by 1.15%, underperforming the broader market and marking the third consecutive day of decline since the low on April 22. The Russell 2000 Index, which is dominated by value stocks, closed up by 0.32%, outperforming the broader market and moving away from the low since the decline on April 22.

In the Dow component stocks, Johnson & Johnson led the gains with a rise of over 4%, followed closely by Amazon and Boeing with gains of over 2%. Industrial giant 3M (MMM) rose by 2% after a 4.7% surge following Morgan Stanley's upgrade to overweight after Tuesday's earnings report.

Among the major sectors of the S&P 500, six closed lower on Wednesday, with energy hit hard by a sharp drop in oil prices, down by 1.6%. The IT sector, which includes chip stocks like Nvidia, fell by nearly 1.3%, while financials and non-essential consumer goods, including Amazon, also saw slight declines. Among the five sectors that closed higher, utilities rose by over 1.1%, and the communication services sector, where Meta is located, rose by over 0.8%.

Including Microsoft, Apple, Nvidia, Google's parent company Alphabet, Amazon, Meta's parent company Facebook, and Tesla, the tech giants "Seven Sisters" saw mixed movements, with Nvidia leading the declines. Tesla, which fell by nearly 5.6% on Tuesday, closed down by 1.8%, continuing to move away from the high since the 15% rebound on March 1.

Most major U.S. stock indexes rose after Powell's speech, but after Powell's press conference, they either turned downwards or gave back most of their gains Among the six FAANMG technology stocks, Amazon, which announced its financial report, rose nearly 6% at midday and closed up 2.2%, approaching the closing high since April 17 set on Monday after falling more than 3% on Tuesday; Meta closed up nearly 2.1%, rebounding after hitting the closing low since February 1 for two consecutive days; Microsoft, which fell for two consecutive days to the closing low since January 12 on Tuesday, rose nearly 1.5%; Alphabet rose 0.6%, failing to continue the rebound from the closing historical high set last Friday; Netflix, which fell for three consecutive days to the low since January 24 on Tuesday, rose 0.2%; while Apple, which turned lower in the final trading session, fell 0.6%, continuing to fall from the closing high since April 12 set after the rebound on Monday.

Chip stocks overall underperformed the broader market, with the Philadelphia Semiconductor Index and the Semiconductor Industry ETF SOXX falling by about 3.5% and 3.4% respectively, falling for two consecutive days to the low since April 23. Among chip stocks, Nvidia fell nearly 6% near midday, closing down over 3.9%; AMD fell nearly 10.3% after announcing its financial report, with the decline narrowing slightly after the Fed meeting, closing down about 9%; Intel, which turned higher at midday and then lower in the final trading session, fell nearly 0.4%, falling for four consecutive days since announcing its financial report last week; at the close, Arm fell 5.8%, Broadcom fell over 4%, Micron Technology fell 2.8%, and Taiwan Semiconductor's US stock fell nearly 1.8%.

Nvidia, Amazon, and other seven technology giants overall rose after Powell's speech, but later gave back most of the gains and turned lower.

Most AI concept stocks that fell sharply on Tuesday rebounded. At the close, SoundHound.ai (SOUN) rose 3.8%, BigBear.ai (BBAI) rose 3.6%, Adobe (ADBE) rose 1.4%, Oracle (ORCL) rose nearly 0.8%, C3.ai (AI) rose 0.7%, Palantir (PLTR) rose nearly 0.7%, while Super Micro Computer (SMCI), which announced its financial report, fell by about 18.5% in the morning and closed down 14%; Astera Labs (ALAB), known as "Little Nvidia" and selling data center interconnect chips, fell 11.7%.

Overall, popular Chinese concept stocks rebounded. The Nasdaq Golden Dragon China Index (HXC) rose nearly 0.6%, outperforming the broader market, rebounding after a more than 3% drop on Tuesday ended a six-day rally. The Chinese concept ETFs KWEB and CQQQ rose nearly 0.4% and nearly 0.5% respectively. Among new energy vehicle companies, at the close, Nio rose nearly 11.7%, Li Auto rose nearly 0.3%, Xiaomi rose 0.2%, while XPeng fell 0.1%. Among other individual stocks, at the close, JD.com rose over 1%, Alibaba, Baidu, and Tencent rose nearly 0.9%, Bilibili rose 0.7%, NetEase rose 0.6%, while Pinduoduo fell nearly 0.6% Among the stocks that announced their financial reports, Starbucks (SBUX) fell by 15.9% as its second-quarter earnings and revenue were lower than expected and its annual guidance was revised downwards; CVS Health (CVS), a pharmacy chain store, fell by 16.8% as its first-quarter earnings were lower than expected and its full-year profit guidance was revised downwards; Estée Lauder (EL), a beauty giant, fell by 13.2% as its fourth-quarter profit guidance was lower than expected; Kraft Heinz (KHC) fell by 6% as its first-quarter revenue was lower than expected; Yum Brands (YUM), the parent company of KFC, fell by 4.2% as its first-quarter earnings and revenue were lower than expected.

On the other hand, Pfizer (PFE) rose by 6.1% as its first-quarter performance exceeded expectations and its annual guidance was raised; Powell Industries (POWL), a power infrastructure company, rose by 18.9% as its second-quarter revenue and earnings exceeded expectations; New York Community Bank (NYCB) rose by 28.3% despite a $335 million loss in the first quarter, as the CEO mentioned a clear path to profitability in the next two years; Pinterest (PINS), a social media company, rose by 21% as its first-quarter revenue and second-quarter guidance were higher than expected.

In European stocks, including the four major economies in the Eurozone - Germany, France, Italy, and Spain, European stock markets were closed on Labor Day, leading to a slight decline in the pan-European index for two consecutive days. The STOXX 600 index fell by 0.11%, moving further away from the closing high since April 8 after two days of slight declines. The UK stock market, which slightly declined on Tuesday, continued to retreat from the record high closing levels set for three consecutive days until Monday.

Among the stocks that announced their financial reports, Aston Martin, a luxury car manufacturer listed in London, fell by nearly 12% intraday and closed down by almost 6.8% after reporting a larger-than-expected widening of losses after tax adjustments in the first quarter, nearly doubling year-on-year. On the other hand, GlaxoSmithKline, a London-listed pharmaceutical company that raised its full-year profit guidance, rose by 1.9%.

Two-Year U.S. Treasury Yield Drops Over 10 Basis Points After Powell's Speech, Ending Five-Month High

The yield on the benchmark 10-year U.S. Treasury note rose to 4.70% in early European trading, then fell below 4.64% in early U.S. trading to hit a daily low. Powell stated that the next move is unlikely to be a rate hike, causing the yield to briefly drop below 4.60% and reaching below 4.58%, the lowest since April 23, dropping by about 10 basis points during the day. This move is far from the high of 4.73% reached last Thursday, the highest since November 2, 2023. By the end of the bond market session, the yield was around 4.63%, down about 5 basis points from Tuesday's close of 4.6798%, along with other U.S. bond yields falling after a rebound on Tuesday.

Various U.S. bond yields fell after a rebound on Tuesday, with short-term bond yields leading the decline.

The more interest rate-sensitive 2-year U.S. Treasury yield rose to 5.04% in pre-European trading, approaching the high reached since November 14, 2023, after breaking above 5.04% on Tuesday. After Powell's speech, European stocks continued to fall after the opening, with U.S. stocks hovering around the 5.0% level in early trading. Powell's denial of another rate hike led to a brief drop below 4.93% to hit a daily low The intraday drop was about 11 basis points, reaching around 4.96% by the end of the bond market session, with an intraday drop of about 7 basis points.

The two-year US Treasury yield fell back below 5.0%.

After Powell's speech, the US dollar index, which hit a two-week high during the session, accelerated its decline, and the yen surged more than 3% at the end of the session.

Tracking the ICE US Dollar Index (DXY), which measures the US dollar against a basket of six major currencies including the euro, approached 106.50 before the European stock market session, refreshing its intraday high since April 16, nearing the high set on November 1, 2023, after breaking above 106.50 on April 16. It rose 0.25% intraday, then continued to fall. Before the US stock market session, the index turned lower, briefly falling below 105.80 after the Fed's decision was announced, and rapidly expanded its decline after the US stock market closed, briefly falling below 105.50 to set a new daily low, with an intraday decline of over 0.7%.

By the end of Wednesday's forex session, the US dollar index was above 105.60, down nearly 0.6% intraday; the Bloomberg Dollar Spot Index, which tracks the US dollar against ten other major currencies, fell nearly 0.2% intraday, dropping from the high set on Tuesday since April 16, and fell over 0.5% after the Fed announcement, following the rebound on Tuesday.

The Bloomberg Dollar Spot Index hit a daily low after Powell's speech, narrowing some of the decline after Powell's press conference.

Among non-US currencies, the yen surged at the end of the session, with the dollar against the yen approaching 158.00 before the European stock market session to set a new daily high, rising over 0.1% intraday. Before the US stock market session, the dollar fell, and after the US stock market closed, it plunged, briefly approaching 153.00 to 153.04, falling 3% intraday, over 3.1% from the daily high, returning to around 154.30 at the end of the forex session, narrowing the intraday decline to 2.2%; the euro against the dollar fell below 1.0650 before the European stock market session, setting a low since April 23, then rose after the Fed meeting, with the US stock market rising above 1.0730 at midday, approaching the high set on April 11 since breaking above 1.0740 last Friday, rising over 0.6% intraday; the pound against the dollar rose to test 1.2550 at midday, setting a new daily high, rising nearly 0.5% intraday, not moving further away from the high set on Monday at 1.2570 since April 11.

The yen surged abruptly after the US stock market closed on the day of the Fed's decision, suspected to be Japan's second intervention this week following Monday Offshore Chinese Yuan (CNH) against the US Dollar hit a daily low of 7.2549 in the early Asian session, then continued to rise. During the midday session of the US stock market after the Federal Reserve's decision, it rose to 7.2318, hitting a high since March 22 of 7.2177, up 230 points intraday. At 4:59 am Beijing time on May 2, the offshore Chinese Yuan against the US Dollar was reported at 7.2341, up 207 points from the New York closing on Tuesday, rebounding after falling on Tuesday.

Bitcoin (BTC) was above $60,000 in the early Asian session, hitting a daily high, with some platforms rising above $61,000. Overall, during the European and American trading sessions, it trended downwards. During the midday session of the US stock market, it briefly fell below $56,800, with some platforms dropping below $56,600, hitting the lowest level in two months since the end of February. Compared to the daily high, it dropped over $4,000, a decrease of over 7%. After the Federal Reserve announced its decision, the decline narrowed by more than half, briefly rising above $59,000, with some platforms testing $59,500, rebounding over $2,000 from the daily low. At the end of the US stock market, it fell to below $58,000, closing above $57,000, with some platforms dropping below $57,100, down around 4% in the last 24 hours.

After the Federal Reserve meeting, Bitcoin, which fell over $4,000 intraday, briefly rebounded over $2,000, but then resumed its decline along with the overall US stock market, with the decline widening.

Crude Oil Falls Over 3%, Marks Largest Decline in Nearly Four Months, Three Consecutive Declines to Seven-Week Lows

International crude oil futures were in a downward trend throughout Wednesday, with US WTI crude oil falling below $80 in the early US stock market session. During the midday session of the US stock market, it hit a new low since March 12, with US oil nearing $78.80, down nearly 3.8% intraday, while Brent crude oil approached $83.30, down about 3.5%.

Ultimately, crude oil fell for three consecutive days, marking the largest daily decline since Saudi Arabia unexpectedly cut its official crude oil selling price to Asia on January 8 after April 17. WTI June crude oil futures fell by $2.93, a decline of over 3.576%, to $79.00 per barrel; Brent July crude oil futures fell by $2.89, a decrease of nearly 3.35%, to $83.44 per barrel, both hitting closing lows since March 12.

US gasoline and natural gas futures continued to decline together. NYMEX June gasoline futures fell by about 4.2%, closing at $2.5774 per gallon, falling for three consecutive days, hitting the lowest closing level since March 8; NYMEX June natural gas futures fell by over 2.96%, closing at $1.9320 per million British thermal units, falling for two consecutive days to the lowest level since April 22

Gold rebounds, spot gold moves away from four-week lows, rises over 1% after the Fed meeting

London base metals futures fell across the board on Wednesday. Tin fell by over 4% on Tuesday, with zinc falling by nearly 2%, leading the decline for two consecutive days, refreshing three-week lows over the two days, with copper, zinc, and lead all falling for two consecutive days. Copper closed below $9,900, continuing to retreat from the high in April 2022 after breaking $10,000 on Monday. Zinc and lead continued to fall from highs since March last year and November last year, respectively. Nickel, which rose for two consecutive days, and aluminum, which rose for three consecutive days, fell back, with nickel falling by nearly 1.9%, failing to approach the high since September last year set last Monday.

Gold rose during Wednesday's session. In the Asian session, New York gold futures fell to $2,291.7, down nearly 0.5% intraday, while spot gold fell below $2,282, down about 0.2% intraday, both refreshing intraday lows since April 5th for two consecutive days, and then continued to rise, with European stocks rising back above $2,300 during the session.

At the close, COMEX June gold futures rose by 0.35% to $2,311 per ounce, moving away from the closing low set on April 2nd after refreshing it on Tuesday. It rose for the fourth day in the last five trading days, but due to a sharp drop of 2.3% on Monday, it is still expected to decline for the week.

During the midday of the U.S. stock market after the Fed announced its decision, the gold price quickly expanded, approaching $2,340 during Powell's speech, rising by nearly 1.6% from Tuesday's close. Spot gold rose above $2,328, up over 1.8% intraday.

After giving back some gains, at the close of the U.S. stock market, spot gold was slightly above $2,310, up around 1.1% intraday, while futures gold was above $2,320, up around 0.9% intraday.

Spot gold rises above $2,300, up over 1% after Powell's speech