US markets closed mixed on Monday, with the Dow rising 260 points. Nvidia plunged 6.7%, dragging the Nasdaq lower.

This week, investors are focused on the Fed’s preferred inflation measure, the PCE data, and earnings reports from FedEx and Micron. Chicago Fed President Austan Goolsbee mentioned that slowing inflation data could open the door to more accommodative policies.

Signs of market fatigue are emerging, especially with Nvidia facing continuous sell-offs. Nvidia fell 6.7% on Monday, marking its third consecutive day of significant losses. The stock has dropped over 16% from its recent peak, entering a correction phase.

Last week, Nvidia briefly surpassed Microsoft to become the most valuable company in the US stock market, but has since retreated.

Katie Nixon, Chief Investment Officer at Northern Trust Wealth Management, commented on Nvidia: “After an extreme price surge, the stock might hit some speed bumps ahead. This isn’t due to concerns about the fundamentals of the AI giant, but rather because the stock’s rapid rise has made the market more cautious.”

US Stocks

Fundamental Analysis: 

Major tech stocks were mostly down, with Nvidia dropping over 6%, marking its largest single-day drop in two months, and its market cap falling below $3 trillion. Netflix fell over 2%, Amazon nearly 2%, and Microsoft and Google slightly declined.

The semiconductor, computer hardware, and software sectors led the declines, with AMD down over 8%, Dell Technologies, Qualcomm, and ARM down over 5%, Navitas Semiconductor down over 4%, and ASML, Broadcom, and TSMC down over 3%.

Most popular Chinese stocks rose, with the Nasdaq Golden Dragon China Index up 1.30%. Li Auto and NIO rose over 3%, XPeng and Futu Holdings over 2%, Tencent Music, NetEase, and Alibaba over 1%, and JD.com, Weibo, iQiyi, and Baidu slightly up. Bilibili, Pinduoduo, Full Truck Alliance, and Vipshop fell over 1%.

Technical Analysis: 

(S&P 500 Index, 1-day chart) 

Market Trends: 

• Dow Jones: Up 260.88 points, or 0.67%, at 39,411.21
• Nasdaq: Down 192.54 points, or 1.09%, at 17,496.82
• S&P 500: Down 16.75 points, or 0.31%, at 5,447.87

Hong Kong Stock Market

 Fundamental Analysis: 

Hong Kong’s major indices were mixed. Tech stocks showed divergent trends, with Meituan up over 2%, NetEase, Tencent, and Alibaba up nearly 1%, Lenovo down over 3%, and Xiaomi down over 1%.

Education stocks led the gains, with New Oriental up over 6%. Auto stocks were active, with Leapmotor and Great Wall Motor up over 3%.

Semiconductor stocks continued to decline, with Hua Hong Semiconductor down over 4%. Among individual stocks, Chinese Estates Holdings surged 29%, and Fosun Pharma, which is set to be privatized, rose nearly 19%.

Semiconductor stocks extended their losses, with Hua Hong Semiconductor down over 4%. The US Treasury released a 165-page draft on August 21, proposing restrictions on investments in China’s high-tech sectors.

The “Notice of Proposed Rulemaking” (NPRM) aims to limit US entities’ investments in Chinese semiconductor, quantum information technology, and AI sectors, detailing specific regulations.

Technical Analysis:  

(Hang Seng Index, 1-day chart) 

Market Trends: 

• Hang Seng Index: Up 0.45%, at 18,109.2
• Hang Seng Tech Index: Down 0.26%, at 3,668.06
• Hang Seng China Enterprises Index: Up 0.54%, at 6,475.96

FTSE China A50 Index

Fundamental Analysis: 

Mainland China’s major indices fluctuated, with the ChiNext Index down 1.35%. The chip and semiconductor sectors corrected, while industrial machinery and reducers showed strength.

Education, auto parts, textile manufacturing, general equipment, and new metal materials sectors, along with industrial machinery, PVDF, reducers, and PEEK materials, led the gains.

The semiconductor and components, electronic chemicals, communication equipment, consumer electronics, and precious metals sectors, along with automotive chips, AI PCs, AI phones, and CPO concepts, led the declines.

Technical Analysis:  

(SSE Composite Index, 1-day chart) 

Market Trends: 

• Shanghai Composite Index: Down 0.38%, at 2,951.95
• Shenzhen Component Index: Down 0.62%, at 8,868.40
• ChiNext Index: Down 1.35%, at 1,708.09

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