U.S. Stocks Plunge by 800 Points

With the recent interest rate hike by the Federal Reserve now settled, there is a nearly two-month calm period ahead, hence the recent shift in investors' focus towards whether the U.S. economy will fall into a recession.

It is quite evident that the White House's opinion is in opposition to Wall Street's, which has also led to a wait-and-see attitude among investors. Last night, the Dow Jones Industrial Average (DJIA) experienced a maximum drop close to 800 points, which sufficiently illustrates that the global financial market is fluctuating back and forth in this mindset, making it difficult to determine the future direction.

The A-share market also seems to have been affected to some extent.

01, U.S. Stocks

Early this morning, when the U.S. stock market closed, all three major indices experienced significant declines.

Due to a drop in shares of tech giants, the Nasdaq Composite Index fell by 233 points, ending with a 2.2% decline, which was the largest among the three major indices.

The DJIA closed down by 1.05%, but the maximum intraday drop reached 2.4%, falling nearly 800 points.

Apple, Google, and Microsoft all saw declines exceeding 2%, while NVIDIA's drop reached 7%, leading a decline in a batch of semiconductor stocks. Onsemi fell by 4%, and Qualcomm fell by 3%.

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Micron Technology's stock price fell by 3.4% after releasing its latest quarterly report. The company's operating income and profits significantly underperformed market expectations, and the company is also preparing for substantial layoffs in 2023, which may be a concentrated reflection of the current semiconductor chip industry.

Among the giant stocks, Tesla experienced the most significant decline, with its stock price falling back to the levels of September 2020 after another 9% drop.A few days ago, Tesla's market value had just fallen below $500 billion, and now it has further plummeted to below $400 billion, even briefly dipping below $390 billion.

Tesla's factories in the United States and Germany are slowly increasing delivery volumes, but this has not had a significant positive impact on the stock price.

02, GDP Turns into Bad News

Last night, the United States released the final figure for the third quarter GDP, which surprised the market.

Previously, when the value was initially announced, it was estimated to be 2.9%, and the current final value announced is 3.2%, which exceeded market expectations and was much better than the situation in the previous two quarters.

In the first and second quarters of this year, the United States' GDP fell on a quarter-over-quarter basis, leading the country into a technical recession.

However, at that time, U.S. President Biden kept emphasizing that this was not a factual recession, and the U.S. economy was not that bad, with no other signs of recession appearing.

Now it seems that the third quarter GDP figures give the U.S. authorities more confidence.

Correspondingly, the number of people applying for unemployment benefits is still low, which also indicates that the current labor market is still strong and has not seen the inevitable rise in unemployment rates that usually occurs during a recession.

03, The Federal Reserve May Drag Down the EconomyHowever, better-than-expected economic data is bad news for the stock market. After all, for now, the trend of the U.S. stock market is very unpredictable.

In the four trading days of this week, there was a significant decline on Monday, a small rebound on Tuesday, a larger increase on Wednesday, but on Thursday, all the previous gains were completely erased.

Looking at the weekly line, both the Nasdaq Index and the S&P 500 Index have turned into negative lines this week, with only the Dow Jones Index slightly increasing.

The rebound of the stock market is so difficult, mainly because the market is uncertain about how the Federal Reserve will respond in the future.

Although Wall Street has repeatedly emphasized that the United States will inevitably enter a recession next year, the current economic data is not bad, and it is possible that the Federal Reserve can continue to raise interest rates by more than 50 basis points, which is the biggest concern of the market.