Discover the innovative investment research assistant now. On December 10th, local time, the three major US stock indices closed lower, with the Dow Jones down 0.35%, the Nasdaq down 0.25%, and the S&P 500 down 0.30%. The “Tech Seven Sisters” experienced a general increase. Alphabet Inc. (GOOGL), the parent company of Google, led the S&P 500 telecommunications sector with a 5.59% increase, marking the largest single-day gain since April, closing at $185.
17, nearing its historical closing high of $190.71 set on July 10th. According to the China Fund News, Google’s release of the new quantum computing chip, Willow, has caused a significant sensation in the global tech community. This is considered a major breakthrough in the field of quantum computing, seen as the next technological frontier for many tech companies. Officially, this small chip can complete computational tasks that would take supercomputers billions of years in just five minutes.
Even Elon Musk expressed his amazement with an exclamation of “Wow!” This achievement was personally announced by Google’s CEO, Sundar Pichai, on social media and has been urgently published in the scientific journal Nature. Analysts say Willow is of epoch-making significance and will be the first step in building useful quantum computing, with great potential in AI large models, drug discovery, nuclear fusion, battery design, and many other fields in the future.
Tesla rose 2.87%, Meta Platforms increased over 0.9%, Apple rose over 0.4% to continue setting a new historical closing high, Amazon fell over 0.4%, Microsoft fell 0.6%, and Nvidia fell 2.69%. Additionally, Berkshire Hathaway Class B shares closed down 0.3%, Eli Lilly fell 0.5%, AMD fell 2.39%, and TSMC ADR fell 3.63%. The NASDAQ Golden Dragon China Index closed down 4.34%, with popular Chinese concept stocks collectively declining.
Tiger Brokers fell over 14%, Futu Holdings fell over 11%, Bilibili fell over 11%, NIO fell over 7%, XPeng Motors fell over 6%, Pinduoduo and Li Auto fell over 5%, and NetEase, JD.com, and Baidu fell over 4%. According to Securities Daily, analysts believe the main reason for the adjustment of Chinese concept stocks is that the gains from the previous trading session were too large, and some short-term profit-taking funds have realized their gains.
Additionally, the overall high and then falling trend of the A-share and Hong Kong stock markets on December 10th also brought some adjustment pressure to Chinese concept stocks. According to the China Securities Journal, Wang Yajun, co-head of Goldman Sachs Asia (excluding Japan) Equity Capital Markets, said that due to China’s debt reduction measures, moderately loose monetary policy expectations, more proactive fiscal policy expectations, and attractive valuations, a recovery in the Hang Seng Index and US-listed Chinese concept stocks is expected.
It is noteworthy that significant US economic data is about to be released. In a recent report, US banks warned that despite some alleviation of market concerns about US inflation, the impact of the upcoming November CPI data on the US stock market, to be announced on Wednesday (evening of December 11th, Beijing time), may exceed investors’ expectations. The market generally anticipates that the inflation rate for November will rebound from 2.
6% in the previous month to 2.7%, while the core CPI is expected to remain within the range of 3.2% to 3.3%. Bank of America strategists indicated that this inflation report could have a particularly noticeable effect on US stocks, with the Bloomberg Inflation Surprise Index suggesting that the upcoming inflation data may present the largest unexpected increase in CPI since May of this year. The strategists added that a softening in CPI data could pave the way for a year-end rebound, as the second half of December is typically the second strongest period for US stocks, with an average increase of 1%.
Conversely, a strong CPI data could reshape volatility, especially after a 5% rebound following the US election, as the market has accumulated a significant amount of profit-taking positions. More importantly, the latest inflation data will affect the Federal Reserve’s next interest rate decision. An unexpected upward trend could increase the possibility of the Federal Reserve pausing the rate-cutting cycle earlier than the market expects.
According to data from the CME FedWatch Tool, the market currently estimates an 85.8% probability that the Federal Reserve will cut rates again at next week’s meeting. At present, Morgan Stanley, Macquarie, ABN Amro, and Wells Fargo all maintain their forecasts for a 25 basis point rate cut by the Federal Reserve next week. US President Biden warned on December 10th that Republican Trump’s plan to reshape global trade by extending tax cuts and imposing tariffs could have a negative impact on the US economy.
Biden cautioned that if Trump implements tax cuts for the wealthy, reduces social welfare spending, withdraws infrastructure investment, and imposes new tariffs on trade partners, it could threaten the fruits of economic growth. He also pointed out that if the US abandons free trade policies, it could allow competitors to play a more significant role in shaping the global order. Economists generally believe that the Republican promise of high tariffs could reignite inflation, and further corporate tax cuts could widen the US’s already high deficit.
