Breakfast | Tesla plunges, panic index soars! S&P, Nasdaq see largest single-day drop in a year and a half

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Overnight Morning Market

Poor financial reports from tech giants trigger panic selling, with S&P and Nasdaq posting their deepest declines in a year and a half!

Overnight, all three major U.S. stock indexes closed lower, with the Dow down 1.25% at 39,853.87 points, the S&P 500 down 2.31% at 5,427.13 points, and the Nasdaq down 3.64% at 17,342.41 points. The S&P 500 index fell below its 50-day moving average for the first time since May 3, ending the longest streak since 2007 of not falling more than 2% in a single day, while the Nasdaq's 3.6% drop marked the largest single-day decline since the end of 2022.

The "Big Seven" tech giants collectively lost nearly $1.75 trillion in market value compared to their peak ten days ago. Tesla fell by 12.33%, marking its largest single-day decline since September 2020. NVIDIA dropped by 6.8%, Meta by over 5.6%, Alphabet-C by 5.04% for the biggest half-year decline since the end of January, Microsoft by around 3.6%, Amazon by around 3%, and Apple by around 2.9%.

Chip stocks suffered across the board, with the Philadelphia Semiconductor Index falling by 5.41%.

AI concept stocks were hit hard. BullFrog AI fell by 11.71%, "NVIDIA concept stock" Serve Robotics by 8.94%, Oracle by 3.03%, Snowflake by 5.26%, Palantir by 7.67%, CrowdStrike by 3.99%, BigBear.ai by 0.65%, NVIDIA concept stock SoundHound by 7.89%, and Dell by 7.73%.

Most Chinese concept stocks declined. The NASDAQ Golden Dragon China Index (HXC) fell by 1.93%, and the KraneShares CSI China Internet ETF (KWEB) closed down by 2.10%.

Among popular Chinese concept stocks, Nio fell by 4.02%, XPeng by 4.17%, ZEEKR by 7.73%, Li Auto by 4.61%, Bilibili by 2.56%, JD.com by 1.64%, Tencent Holdings (ADR) by 1.49%, Alibaba by 0.39%, Baidu by 1.79%, Pinduoduo by 0.91%, while NetEase rose by 1.16%.

Blue Chips and Hot Stocks

NVIDIA launches "China Special Edition" chips again, can it regain the Chinese market? According to the Global Times, industry insiders analyzed that the new special edition chips still have advantages in ecosystem compatibility and ease of use, but their overall performance is no longer as good as some domestic chips. Moreover, the current "special edition" H20 chips can't even guarantee basic stable supply, let alone meet the increasing demand for computing power from Chinese enterprises.

Insiders revealed that Samsung Electronics' fourth-generation High Bandwidth Memory (HBM3) chips have been approved by NVIDIA and will be used in its processors for the first time, specifically for AI chips tailored for the Chinese market.

Meng Fanli, Secretary of the Shenzhen Municipal Party Committee in China, met with Jeff Williams, Chief Operating Officer of Apple. Jeff Williams expressed that Apple is willing to further deepen practical cooperation with Shenzhen to achieve common development

Financial Highlights

Deutsche Bank reports first quarterly loss in four years, trading weakness and litigation impact, announces abandonment of share buyback, plunges over 9% overnight. Deutsche Bank reported a net loss of 143 million euros in Q2, compared to a profit of 763 million euros in the same period last year, due to a 1.3 billion euro provision for litigation related to the acquisition of Deutsche Postbank, as well as a slowdown in FIC sales and trading revenue growth.

Kering's net profit halves in the first half of the year, warns of a potential 30% profit decline in the second half, drops over 8% overnight. Kering's revenue for the first two quarters of this year both decreased by over 10%, with its flagship brand Gucci's revenue down 20% year-on-year and profit down 44% in the first half of the year; sales in the Asia-Pacific region, including China, dropped by 22% in the first half of the year, with a further acceleration in the decline in the second quarter.

IBM exceeds revenue expectations, citing over $2 billion in revenue from cognitive AI, stock price rises nearly 3% after hours. The company reported earnings per share of $1.99 for the second quarter, beating expectations of $1.80; revenue was $15.77 billion, surpassing the expected $15.62 billion; net profit was $1.834 billion, exceeding the expected $1.67 billion.

Ford Motor's second-quarter EPS falls short of expectations, still expects Ford Pro's EBIT to lose at least $5 billion for the full year, drops nearly 12% after hours. The company reported adjusted earnings per share of $0.47 for the second quarter, below the expected $0.67; revenue was $47.808 billion, surpassing the expected $43.76 billion; net profit was $1.831 billion, below the expected $2.61 billion. Adjusted EBIT for the second quarter was $2.8 billion, below the expected $3.73 billion.

In the semiconductor sector, KLA's revenue and profits for the fourth quarter both exceeded expectations, rising nearly 5% after hours.

American fast-food chain Chipotle saw same-store sales growth of over 11% in the second quarter, exceeding market expectations, with a post-market surge of over 14%.

Macro: Insights into the World

Authoritative materials on the 20th Third Plenum of China: reforms in the capital market, income distribution, new development models for real estate, optimization of land resource allocation, central-local fiscal reforms, tax reforms, platform economy regulation, standardization of wealth accumulation mechanisms, improvement of financial regulation, reforms in the science and technology financial system, and reforms in natural monopoly industries.

Chinese state-owned banks initiate a new round of deposit rate cuts. Industrial and Commercial Bank of China and Agricultural Bank of China announced a reduction in deposit benchmark interest rates, with a 5 basis point cut for demand deposit rates, and a 10 basis point cut for three-month, six-month, one-year, and other deposit rates. Two-year, three-year, and five-year rates were reduced by 20 basis points each, to 1.45%, 1.75%, and 1.8% respectively.

Harris takes the lead, reshaping the landscape of the U.S. presidential election! According to the Global Times, within 24 hours of Biden's withdrawal, Harris' team raised $81 million, breaking the single-day fundraising record for candidates in this election. Harris taking the lead will reshape the landscape and focus of the U.S. presidential election, requiring both the Democratic Party to re-strategize and the Republican Party to adjust its strategy.

The U.S. Markit Manufacturing PMI for July hits a 7-month low, while the Services PMI reaches a 28-month high. The Eurozone's Manufacturing PMI for July hits a 7-month low, with Germany's Composite PMI unexpectedly contracting According to sources, the Bank of Japan is expected to consider raising interest rates next week and plans to halve its bond-buying program in the coming years. The Bank of Japan's board generally agrees on the necessity of raising rates in the near future, but has not made a final decision on whether to raise rates next week or later this year