On Tuesday, US stock market closed lower, with the Dow Jones Industrial Average falling for the ninth consecutive trading session — its longest losing streak since 1978. NVIDIA entered a correction phase, while Tesla and Apple continued to hit new highs. Investors are now focused on the Federal Reserve’s final monetary policy decision of the year.
The Dow’s extended decline is linked to a sectoral rotation of funds into tech stocks. Following Trump’s re-election in early November, tech stocks rallied, while the Dow, which is dominated by traditional industrial stocks, underperformed.
Notably, NVIDIA’s stock weakened, with a cumulative weekly decline of nearly 3%. Since reaching a peak of $152.88 on November 21, NVIDIA’s share price has fallen more than 10%, officially entering correction territory.
Markets are now closely watching the Federal Reserve’s final interest rate decision for the year. The Fed is expected to announce its decision at 3 a.m. Beijing time on Thursday, followed by a monetary policy press conference from Fed Chair Jerome Powell. The CME FedWatch Tool indicates a 96.3% chance that the Fed will cut rates by 25 basis points this week.
However, economists predict that the Fed’s updated Summary of Economic Projections (SEP), set to be released on Wednesday, will signal a slower pace of rate cuts in 2025. Nick Timiraos, a Wall Street Journal journalist often referred to as the “Fed Whisperer,” noted that one possible scenario this week is for the Fed to cut rates by 25 basis points while using the updated economic forecasts to hint at a slower pace of future rate cuts.
Notable Stocks
Quantum computing stocks surged after Google unveiled its new quantum chip, sparking a frenzy in the sector. Quantum Computing (QUBT) surged more than 50%, continuing its rally from Monday when it gained 65%.
The company announced it had secured a contract with NASA’s Goddard Space Flight Center. Rigetti Computing (RGTI) rose 32% on the day, bringing its weekly gain to over 55%. D-Wave Quantum (QBTS) rose more than 16%, posting a weekly gain of 68%, while IonQ (IONQ) climbed nearly 5%, with a weekly increase of close to 30%.
US Stock Market Overview
Most major tech stocks declined. NVIDIA fell more than 1%, while Netflix, Google, Amazon, and Meta posted small losses. In contrast, Tesla rose over 3%, and Apple and Microsoft recorded modest gains.
- NVIDIA: Entered a correction phase, down over 10% from its November high.
- Tesla, Apple: Both stocks hit new record highs.
The chip, semiconductor, and banking sectors were under pressure.
- Broadcom: Fell nearly 4%.
- Barclays: Dropped over 2%.
- Goldman Sachs, Intel, AMD, ARM, Wells Fargo: All declined by more than 1%.
Chinese ADRs (US-listed Chinese stocks)
Most Chinese ADRs saw gains, with the Nasdaq Golden Dragon China Index up 1.97%.
- Bilibili, Futu Holdings, Tencent Music: All rose more than 4%.
- XPeng, Full Truck Alliance: Gained over 3%.
- NIO, Li Auto, Trip.com, iQIYI, Baidu: All posted gains of more than 2%.
Technical Analysis
Market Recap
- Dow Jones: Fell 267.58 points (-0.61%) to 43,449.90.
- Nasdaq Composite: Dropped 64.83 points (-0.32%) to 20,109.06.
- S&P 500: Declined 23.47 points (-0.39%) to 6,050.61.
Hong Kong Stock Market Overview
Hong Kong’s major indices rose collectively, driven by gains in tech and semiconductor stocks.
- Tech stocks: Tech names were broadly higher, with Xiaomi up over 2%, Baidu up over 1%, and JD.com and Meituan both rising nearly 1%.
- Semiconductors: The semiconductor sector was strong, with SMIC and Hua Hong Semiconductor both climbing more than 2%.
- Gas stocks: The gas sector was active, with China Resources Gas jumping over 4%.
Automotive stocks
Auto stocks broadly rose.
- Brilliance China Automotive: Surged more than 8% after Citigroup released a report noting that the company had revised its dividend policy. The report highlighted Brilliance’s commitment to pay at least 50% of its after-tax profit as dividends, which exceeded market expectations. Citigroup estimated that Brilliance’s 2023 after-tax profit would be around 4 billion yuan, which could translate to a dividend payout of 2 to 3 billion yuan, representing a dividend yield of 12% to 18%. This is expected to have a strongly positive impact on the stock price.
Technical Analysis
Market Recap
- Hang Seng Index: Rose 0.58% to 19,815.30.
- Hang Seng Tech Index: Gained 1.34% to 4,447.80.
- Hang Seng China Enterprises Index: Climbed 0.86% to 7,166.50.
A50 & China A-Shares Overview
China’s A-share market saw a light-volume rebound in morning trading. As of the midday close, total market turnover stood at 840.7 billion yuan, down 151.8 billion yuan from the previous day. Over 3,700 individual stocks advanced.
Sector Performance
The top-performing sectors included:
- Brain-Computer Interface: Led gains with Aipun Medical, Rock Hill Tech, Nanjing Panda, and Yingqu Technology hitting their daily limit-up.
- Semiconductors: Chipmakers rebounded, with Ankai Micro, Dagang Shares hitting limit-up, while Gigadevice Semiconductor and Dongxin Semiconductor followed with gains.
- “中字头” (State-Owned Central Enterprises): Key central state-owned enterprise (SOE) stocks rose, with China Hi-Tech, China Public High-Tech, and China South Media hitting limit-up.
- State-Owned Enterprise (SOE) Reform: Stocks related to state-owned enterprise reform gained traction, with Shenyang Chemical, Datang Telecom, Nanjing Panda, Klaus, and China Auto International among over 10 stocks that hit limit-up.
Underperforming Sectors
Sectors related to domestic consumption saw declines, led by tourism, hotels, and retail
- Tourism & Retail: Stocks like Rhine Sports, Youhao Group, Dalian Saint Asia, Huifa Foods, and Dalian Friendship hit limit-down.
Technical Analysis
Market Recap
- Shanghai Composite (SSE): Up 0.72% to 3,385.64.
- Shenzhen Component (SZSE): Up 0.50% to 10,589.86.
- ChiNext (Growth Enterprise Market Index): Gained 0.11% to 2,203.67.
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