Thursday saw a decline in all three major US stock indices. Federal Reserve Chair Jerome Powell indicated no urgency to cut rates, hinting that a December rate cut is unlikely. Meanwhile, October’s US Producer Price Index (PPI) showed accelerated growth, suggesting upside risks to the Fed’s preferred inflation measure. Additionally, initial jobless claims last week fell to their lowest level since May, further pressuring equities.
At around 4 a.m. ET, Powell delivered a hawkish speech in Dallas, causing a late-session selloff in equities. Powell stated, “The economy isn’t signaling any urgent need to lower interest rates,” marking his first guidance on future monetary policy since the inflation data release. Although he reiterated the balance of risks to jobs and inflation, Powell emphasized the Fed’s 2% inflation target remains unmet and stressed the need to “finish the job.”
Zachary Griffiths, Head of US Investment-Grade and Macro Strategy at CreditSights, remarked that the market is interpreting the Fed’s policy path with two-sided risks. Powell’s comments leaned hawkish as he adopted a risk management approach for future policy.
Following Powell’s speech, the CME FedWatch Tool showed a significant drop in expectations for a 25 basis point rate cut in December, falling to 58.9% from 82.5% the previous day. Markets now predict a roughly 41% probability that the Fed will hold rates steady next month.
EV Stocks Plunge on Policy Speculation
Electric vehicle (EV) stocks faced steep declines on Thursday. Nikola plunged nearly 23%, Workhorse fell 14.49%, Rivian lost 14.3%, and Tesla dropped nearly 6%. The slump followed reports that Trump’s transition team is targeting EV subsidies, planning to eliminate the $7,500 federal tax credit for EVs—a move supported by Tesla representatives and the Republican-led Congress.
Spotlight on 13F Filings
Institutional investors’ Q3 positions revealed notable activity:
- Berkshire Hathaway (Warren Buffett’s firm) continued to reduce stakes in Apple and Bank of America while initiating a position in Domino’s Pizza.
- Bridgewater Associates, the world’s largest hedge fund, significantly trimmed its tech holdings.
- Michael Burry, known as the “Big Short” investor, increased exposure to Chinese stocks.
US Stocks
Fundamental Analysis:
Major tech stocks showed mixed performance.
- Tesla dropped over 5%, with its market cap falling below $1 trillion.
- Google and Amazon slid more than 1%, and Meta saw modest losses.
- Apple gained over 1%, while Nvidia, Microsoft, Netflix, and Intel edged higher.
- Precious metals stocks outperformed: US Gold Corp. climbed over 5%, Hecla Mining rose 3%, and Coeur Mining and Century Aluminum added over 2%.
- Disney surged more than 6% after reporting better-than-expected Q4 earnings.
In contrast, Hims & Hers Health Inc. plummeted 24%, marking its worst single-day performance since its IPO, as weak guidance overshadowed solid Q3 results.
Chinese ADRs (American Depositary Receipts) faced broad declines.
- Bilibili fell more than 12%, XPeng dropped over 5%, NIO declined more than 3%, and JD.com shed over 6%.
- On the upside, NetEase soared over 10%, buoyed by strong Q3 revenue, while iQIYI gained over 2%.
Technical Analysis:
Market Trends:
- Dow Jones: -207.33 points (-0.47%) to 43,750.86
- Nasdaq: -123.07 points (-0.64%) to 19,107.65
- S&P 500: -36.21 points (-0.60%) to 5,949.17
Hong Kong Stock Market
Fundamental Analysis:
Hong Kong’s three major indices ended a five-day losing streak, buoyed by a mix of tech and gold stocks.
- NetEase surged over 13% following a robust Q3 earnings report.
- Bilibili dropped more than 10%, while Sunny Optical Technology gained over 5%.
- Gold stocks rallied, with China Gold International jumping over 11%.
- However, Chinese brokerage stocks weakened, with Huatai Securities sliding 3%.
Key Earnings: NetEase Q3 Performance
- NetEase posted Q3 revenue of RMB 26.2 billion, with gaming and related services contributing RMB 20.9 billion.
- NetEase Cloud Music grew revenue by 1.3% YoY to RMB 2 billion, while its Youdao education business increased revenue by 2.2% YoY to RMB 1.6 billion.
- Net profit attributable to shareholders stood at RMB 6.5 billion.
Technical Analysis:
- Hang Seng Index: +0.26% to 19,486.97
- Hang Seng Tech Index: +0.90% to 4,357.27
- Hang Seng China Enterprises Index: +0.40% to 7,001.01
FTSE China A50 Index
Fundamental Analysis:
Mainland Chinese markets saw mixed performance on Thursday, with AI-related stocks leading gains while military and semiconductor stocks lagged.
Sector Highlights:
- AI applications led gains, with 360 Security Technology, China Digital, and Dragon Media among those hitting daily limit-ups.
- Solid-state battery stocks remained strong; Youyan Technology surged for the 7th time in 8 days, with Transfer Tech and Cool Tech Intelligence also limit-up.
- Chipmakers tumbled, with Tongfu Microelectronics, Shanghai Belling, and Naura Technology down over 5%.
- Defense stocks fell sharply, with Guangqi Technology down 10% and China Satcom dropping over 7%.
Technical Analysis:
Market Trends:
- Shanghai Composite Index: -0.35% to 3,367.94
- Shenzhen Component Index: -0.85% to 10,943.45
- ChiNext Index: -1.49% to 2,300.09
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Disclaimer
This information contained in this blog is for general reference only and is not intended as investment advice, a recommendation, an offer, or an invitation to buy or sell any financial instruments. It does not consider any specific recipient’s investment objectives or financial situation. Past performance references are not reliable indicators of future performance. Doo Prime and its affiliates make no representations or warranties about the accuracy or completeness of this information and accept no liability for any losses or damages resulting from its use or from any investments made based on it.
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