On the first trading day of US stocks in the second half of the year, economic data continued to dampen market sentiment. US stocks showed volatility after the market opened on Friday (1st). After Micron released a lower-than-expected financial forecast, chip stocks fell all the way, but they bought in late trading. Entering utilities, consumer discretionary and real estate stocks, coupled with the thin trading before next Monday’s holiday, led to an intensified rebound in U.S. stocks. The Dow Jones, S&P and Nasdaq closed in the red at the end of the day, only 3.83% in the black, and TSMC’s ADR plummeted nearly 6%.
Looking at the week, the Dow Jones fell 1.3%, the S&P fell 2.2%, and the Nasdaq fell 4.1%, all recording their fourth weekly decline in five weeks.
In terms of data, the U.S. ISM manufacturing index fell to 53.0 in June, lower than the market consensus of 54.9, and the lowest since June 2020. Among them, the new orders index contracted for the first time in two years due to long-term tight supply and weak demand, further proof The U.S. economy is slowing rapidly.
The Atlanta Fed GDPNow indicator expects GDP growth to contract by 2.1% in the second quarter. Combined with a 1.6% decline in the first quarter, it met the technical definition of a recession. Despite the sharper contraction, it also fueled speculation that the Fed could end its rate-hike cycle sooner than expected.
Nomura Securities pointed out that the risk of a technical recession in the United States for the second consecutive quarter is rising, and the officially recognized economic recession in the United States may arrive in the fourth quarter.
Looking ahead to the U.S. stock market outlook, Goldman Sachs issued a report on Friday warning that the odds of another U.S. stock market slump remain high, as investors are currently pricing in only a mild recession. Morgan Stanley predicts that U.S. stocks may drop another 10% before bottoming. Bank of America analysts said the market was on the verge of a recession as the bull and bear indicators remained extremely bearish for the third week in a row.
The global epidemic of new coronary pneumonia (COVID-19) continues to spread. Before the deadline, data from Johns Hopkins University in the United States pointed out that the number of confirmed cases worldwide has exceeded 548 million, and the number of deaths has exceeded 6.33 million. More than 12 billion doses of vaccines have been administered in 184 countries worldwide.
The performance of the four major U.S. stock indexes on Friday (1st):
Focus stocks
The five heavenly kings of science and technology have seen ups and downs. Apple (AAPL-US) was up 1.62%; Meta (META-US) was down 0.76%; Alphabet (GOOGL-US) was down 0.21%; Amazon (AMZN-US) was up 3.15%; and Microsoft (MSFT-US) was up 1.07%.
More than half of the Dow’s components ended in the red. McDonald’s (MCD-US) rose 2.46%; Coca-Cola (KO-US) rose 2.34%; Boeing (BA-US) rose 2.28%; Salesforce (CRM-US) rose 1.91%; Intel (INTC-US) fell 2.86%.
Fei Ban was caught in a sea of blood, and multiple constituent stocks such as AMD, Micron and NVIDIA all hit 52-week lows. AMD (AMD-US) fell 3.66%; NVIDIA (NVDA-US) fell 4.20%; Applied Materials (AMAT-US) fell 5.18%; Micron (MU-US) fell 2.95%; Texas Instruments (TXN-US) fell 3.33 %; Qualcomm (QCOM-US) fell 3.30%.
Taiwan stock ADR was the weakest with TSMC. TSMC ADR (TSM-US) fell 5.81%; ASE ADR (ASX-US) fell 3.09%; UMC ADR (UMC-US) fell 3.25%; Chunghwa Telecom ADR (CHT-US) fell 1.53%.
Corporate News
Apple (AAPL-US) rose 1.62% to $138.93 per share. Apple is about to release its latest earnings report on July 28, and JPMorgan Chase said that despite supply chain issues and macroeconomic conditions, Apple’s upcoming earnings may exceed Wall Street expectations.
TSMC ADR (TSM-US) fell 5.81% to US$77.00 per share, with a conversion price of 458.38 yuan, a discount-premium rate of 1.08%. Semiconductor companies revealed on Friday that due to high inventory levels, TSMC’s three major customers, Apple, AMD and NVIDIA, rarely placed revised orders, among which Apple’s new iPhone 14 shipment target dropped by 10%.
US memory chip maker Micron expects a sharp drop in sales in the third quarter and will cut production. Micron CEO Sanjay Mehrotra said frankly that PC shipments this year will drop by nearly 10%, and smartphone shipments are expected to drop 5%.
Micron (MU-US) fell 2.95% to $53.65 per share on Friday, dragging down semiconductor stocks across the board. Personal computer brand maker Hewlett-Packard (HPQ-US) closed down 2.78% and Dell (DELL-US) fell 7.53% .
Meta (META-US) fell 0.76% to $160.03 a share. Meta Chief Executive Mark Zuckerberg told employees a few days ago that a severe economic recession is on the horizon, with the number of engineers hiring at least 30 percent lower this year.
Auto sales fell 15% in the second quarter after GM announced on Friday that chip shortages and supply chain disruptions delayed production of nearly 100,000 vehicles. Royal Bank of Canada commented: “Despite the disappointing news, it is worth noting that GM is expected to complete production and sell to dealers by the end of 2022.” The stock hit a one-day low of $31.26 before closing in a volatile 1.35% gain at $32.19 a share.
Airbus ADR (EADSY-US) rose 3.58% to $25.16 a share. China’s three major airlines announced on Friday that they have signed contracts with Airbus to purchase nearly 300 passenger planes totaling more than $37 billion.
Economic data
- The final value of the U.S. Markit Manufacturing PMI in June was 52.7, expected to be 52.4, and the previous value of 52.4
- US June ISM manufacturing index reported 53, expected 54.9, the previous value of 56.1
- U.S. construction spending in May reported a monthly growth rate of -0.1%, expected 0.4%, and the previous value of 0.2%
Wall Street Analysis
Paul Kim, CEO of Simplify ETFs, said: “This year has been a push-pull war between inflation and slowing economic growth, and the Fed will need to tighten financial conditions to deal with the inflation behemoth, while trying to avoid it. Panic. I think the U.S. is in a recession now and the only question is how bad will the recession be? We are unlikely to have a soft landing.”
Michael Yoshikami, founder of Destination Wealth Management, predicts the Fed could cut rates as early as this year.
Yoshikami pointed out: “Inflation is getting out of hand now. The Fed will send a very strong signal that they are looking to control inflation, which will put the economy into an environment of slow growth, stagnant inflation or recession, and then I think the Fed It will start cutting rates again later this year, and if the Fed brings the economy closer to recession and breaks high inflation, that’s not necessarily a bad thing.”
Juheng’s warm reminder: U.S. stocks will be closed next Monday (July 4th) for Independence Day.
The figures are updated before the deadline, please refer to the actual quotation.
