US stocks closed sharply lower on Wednesday, led by declines in tech stocks. The Dow Jones fell over 500 points, and the Nasdaq plunged 650 points, dropping more than 3.6%. Tesla tumbled 12%.
Disappointing earnings reports from major tech companies like Alphabet and Tesla sparked concerns about the health of global businesses. The outlook for Federal Reserve rate cuts and sector rotation remained key market focuses.
Google’s Class A shares fell over 5%. Alphabet, its parent company, reported earnings after Tuesday’s close, with revenue and profit exceeding expectations, but YouTube ad revenue fell short. Tesla closed down 12.3% after reporting weaker-than-expected second-quarter earnings, with automotive sales revenue down 7% year-over-year.
Steve Clayton, head of equity funds at Hargreaves Lansdown, commented, “The midterm earnings season has begun, and so far, investors are disappointed with what they’ve seen. There are questions about whether the massive investments in Google’s AI capabilities are truly paying off.”
US Stocks
Fundamental Analysis:
Major tech stocks mostly declined. Tesla fell over 12%, marking its largest single-day drop since September 2020, with its market cap falling below $700 billion. The company released its Q2 earnings after the market closed, with revenue exceeding expectations but profits falling short; operating profit for Q2 was $1.605 billion, down 33% year-over-year, with market expectations at $1.81 billion. Nvidia fell over 6%, Meta and Google fell over 5%, Microsoft and Intel fell over 3%, Apple and Amazon fell over 2%, and Netflix fell over 1%.
Most popular Chinese concept stocks fell, with the Nasdaq Golden Dragon China Index dropping 1.93%. Li Auto, XPeng Motors, and NIO fell over 4%, Tencent Music, Futu Holdings, and iQiyi fell over 3%, Bilibili and Full Truck Alliance fell over 2%, Baidu, JD.com, and Vipshop fell over 1%, while Pinduoduo, Weibo, and Alibaba saw smaller declines. NetEase rose over 1%.
Technical Analysis:
(S&P 500 Index, 1-day chart)
Market Trends:
- Dow Jones fell 504.22 points, or 1.25%, to 39,853.87
- Nasdaq fell 654.94 points, or 3.64%, to 17,342.41
- S&P 500 fell 128.61 points, or 2.31%, to 5,427.13
Hong Kong Stock Market
Fundamental Analysis:
Hong Kong stocks opened lower and continued to decline. Tech stocks broadly fell, with Meituan dropping nearly 5%, Lenovo, Baidu, and Tencent falling over 2%, and Xiaomi, JD.com, and Alibaba following suit.
Gold stocks collectively declined, with Zhaojin Mining falling nearly 8%. Oil stocks fell across the board, with PetroChina falling nearly 4%.
Apple concept stocks led declines, with Cowell Electronic dropping over 6%. Photovoltaic stocks rose against the trend, with Flat Glass Group rising over 8%.
Gold stocks collectively fell, with Zhaojin Mining dropping nearly 8%. Spot gold continued to decline, expanding its loss to about $20, down 0.86% intraday.
CITIC Futures indicated that former President Trump’s public suggestion last Thursday to consider another rate cut in November has created uncertainty about a rate cut in September. This resonance of long-term and short-term policies led to declines across gold, US stocks, nonferrous metals, and energy, impacting all risk and safe-haven assets.
Technical Analysis:
(Hang Seng Index, 1-day chart)
Market Trends:
- Hang Seng Index fell 1.42%, to 17,064.97
- Hang Seng Tech Index fell 1.49%, to 3,439.26
- Hang Seng China Enterprises Index fell 1.73%, to 6,036.17
FTSE China A50 Index
Fundamental Analysis:
A-shares saw mixed movements with the Shanghai Composite Index dropping 0.42%, once falling over 1% during the day, with over 4,300 stocks gaining. Photovoltaic stocks collectively surged.
Photovoltaic, wind power, energy metals, highway and railway transportation, motors, and gaming industries, along with concepts like POE film, BC batteries, ride-hailing, perovskite batteries, and PEEK materials led gains.
Precious metals, banks, coal, and pharmaceutical commerce industries, along with DRG/DIP, China State Shipbuilding, high-speed copper cable, and gold concepts led losses.
Technical Analysis:
(SSE Composite Index, 1-day chart)
Market Trends:
- Shanghai Composite Index fell 0.42%, to 2,889.62
- Shenzhen Component Index rose 0.13%, to 8,504.01
- ChiNext Index rose 0.10%, to 1,652.53
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