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On Wednesday, July 17, local time, the three major U.S. stock indexes rose and fell. As of the close, the Dow Jones Industrial Average rose 0.59%, the Nasdaq fell 2.77%, and the S&P 500 fell 1.39%.

Lithography giant ASML plunged 12.74% in a single day, with its latest market value falling below $400 billion. Its global guidance for the third quarter and the second half of the year was lower than analysts' expectations.

The latest Federal Reserve Beige Book survey showed that the U.S. economy grew slightly and inflation cooled.

Dow Jones hits new high, Nasdaq plunges 500 points

On July 17, local time, the three major U.S. stock indexes rose and fell. As of the close, the Dow Jones Industrial Average rose 243.60 points, or 0.59%, to 41,198.08 points; the Nasdaq fell 512.42 points, or 2.77%, to 17,996.92 points; and the S&P 500 fell 78.93 points, or 1.39%, to 5,588.27 points.

According to Wind data, most U.S. Treasury yields closed higher, with the 2-year Treasury yield up 2.2 basis points to 4.446%, the 3-year Treasury yield up 1.4 basis points to 4.209%, the 5-year Treasury yield up 0.5 basis points to 4.083%, the 10-year Treasury yield unchanged at 4.162%, and the 30-year Treasury yield up 0.4 basis points to 4.377%.

International oil prices rose across the board, with the August contract of U.S. crude up 2.9% to $83.10 per barrel, and the September contract of Brent crude up 1.74% to $85.19 per barrel.

International precious metal futures and spot prices generally closed lower, with COMEX gold futures down 0.19% to $2,463.1 per ounce and London gold spot down 0.40% to $2,458.645 per ounce; COMEX silver futures fell 2.98% to $30.52 per ounce and London silver down 3.03% to $30.286 per ounce.

The S&P 500 fell 1.39%. The Nasdaq 100, which has a high proportion of technology stocks, fell nearly 3%. The Philadelphia Semiconductor Index fell nearly 7%, the largest single-day drop since March 2020. The combined market value of the "Big Seven" technology companies evaporated by $0.53 trillion (about RMB 3.85 trillion) in a single day. The Russell 2000 fell 1.06%. Wall Street's "fear index" - VIX hit its highest level since early May. The Dow Jones Industrial Average rose for the sixth consecutive trading day to set a new high.

“While the rotation out of large-cap tech and into cyclicals and small-caps is encouraging, it feels a bit blindsided that it happened in such a short period of time,” said BTIG’s Krinsky.

"The big question is whether the rest of the market can offset the weakening momentum in the big tech stocks," said Jose Torres of Interactive Brokers.

The Federal Reserve's Beige Book survey showed the U.S. economy growing at a modest pace into the third quarter, with activity flat or falling in some districts. Employment also rose only slightly, according to a report released on Wednesday. Labor turnover declined, with business contacts in several districts expecting to be more selective in hiring and not backfilling all open positions. Wages rose modestly or moderately in most districts, but price gains were generally modest. Consumer spending was little changed, and nearly every district mentioned retailers discounting or consumers buying only necessities.

Fed officials, led by Chairman Jerome Powell, have said in recent weeks that the central bank has made some progress toward its 2% inflation target, even as they have been vague about the timing of rate cuts. “While I don’t think we’re there, I do believe we’re getting closer to a rate cut,” Fed Governor Christopher Waller said on Wednesday.

According to CME's FedWatch tool, the market expects the Fed to cut interest rates by 25 basis points in September, with a 95.5% probability that the federal funds rate will drop from the current 5.25%-5.5% to 5%-5.25%, and a 1% probability of no rate cut.

(Source: CME FedWatch Tool)

Technology stocks fell across the board, and the lithography machine giant plunged 12%

In terms of sectors, 6 of the 11 major sectors of the S&P 500 index rose and 5 fell. Among them, the information technology sector fell 3.72%.

Popular technology stocks generally closed lower. ASML fell more than 12%, AMD fell more than 10%, Arm fell nearly 10%, Qualcomm fell more than 8%, TSMC and Broadcom fell nearly 8%, AMD fell nearly 7%, Nvidia and Micron Technology fell more than 6%, Meta fell more than 5%, Tesla fell more than 3%, Amazon and Apple fell more than 2%, Google A, Netflix, Microsoft, and Texas Instruments fell more than 1%, Intel rose slightly, and Cisco rose more than 2%.

Nvidia fell 6.62%. According to media reports, some large technology companies, including Apple, Nvidia, Salesforce and Anthrophic, were exposed to have used unauthorized data from YouTube, a video site owned by Google, when training AI models. These companies used a data set provided by a third party, which contained a large amount of video subtitle texts grabbed from YouTube, violating YouTube's regulations prohibiting the unauthorized grabbing of content from the platform. The report pointed out that these technology companies all used a data set called "YouTube Subtitles" when training AI models. It is 5.7GB in size, contains 489 million words, and comes from 173,500 videos in more than 48,000 channels on Youtube. The data set consists of plain text of video subtitles, including parts uploaded by video bloggers and text automatically transcribed by Youtube. In addition to English, it is usually accompanied by translations in languages ​​such as Japanese, German and Arabic.

ASML fell 12.74%, and its market value fell below $400 billion. ASML released its second quarter 2024 financial report. Data showed that in the second quarter of 2024, ASML's net sales were 6.2 billion euros, an increase of 17.2% from 5.29 billion euros in the same period last year; net profit was 1.6 billion euros, an increase of 30.7% from 1.224 billion euros in the same period last year. Although ASML delivered a satisfactory second quarter report, analysts still expressed disappointment with its global guidance for the third quarter and the second half of the year. ASML expects third-quarter revenue to be between 6.7 billion euros and 7.3 billion euros, lower than the market expectation of 7.46 billion euros; the gross profit margin in the third quarter is expected to be 50.5%, also lower than the market expectation of 51.1%.

Google A fell 1.58%. According to Reuters, GitLab, an American software developer backed by Google's parent company Alphabet, is exploring a sale, a move that has attracted the interest of several potential buyers, including cloud monitoring company Datadog. GitLab, headquartered in San Francisco, has a market value of over $8 billion and is currently working with investment bankers to advance the sales process. At present, neither GitLab nor Datadog has responded to the news, and GitLab's stock price closed up 9.34%. GitLab provides a set of tools to help companies manage the software development cycle and has more than 30 million registered users, including more than half of the Fortune 100 companies.

Netflix fell 1.35%. Netflix is ​​working to expand its advertising business as user growth slows. According to LSEG data, Netflix added an estimated 4.82 million new subscribers in the second quarter, the smallest growth in the past five quarters. Analysts said the slowdown was partly because many viewers turned their attention to summer sporting events including the European Football Championship. Nevertheless, Netflix's efforts to promote low-priced ad-supported packages have brought strong growth in advertising revenue, which is expected to double in June. In addition, Netflix has announced bundling partnerships with Comcast and others, and plans to expand more live content to attract advertisers.

(Netflix's new user trends. Source: LSEG)

Amazon fell 2.64%. According to MomentumCommerce, which manages brands in 50 different product categories, sales in the first seven hours of Amazon's PrimeDay event increased by nearly 12% year-on-year. MomentumCommerce manages brands including Crocs, Lego and Beats by Dre, which have annual sales of about $7 billion on Amazon. According to tracking data from market research firm Numerator, the average household spends about $100 on PrimeDay, and hot-selling items include protein shakes, Amazon FireTV sticks, sunscreen and Amazon HappyBelly branded grocery products. Adobe expects total online sales for the entire two-day event to reach $14 billion, an increase of nearly 11% over last year. EMarketer gave a more conservative estimate, predicting that U.S. online sales will increase by 6% to $13.8 billion and Amazon's direct sales will increase by 5.5% to $8.2 billion. In addition, U.S. Senator Bernie Sanders released a report saying that the surge in orders during PrimeDay could increase the risk of injury to Amazon workers. Amazon responded to the report, saying that "broad and inaccurate conclusions were drawn based on unverified anecdotes."

Apple fell 2.53%. Apple's iPhone 16 series has entered the stocking period, and iPhone mobile phone OEM Foxconn has entered the peak season recruitment stage. Mobile phone manufacturers continue to launch new products and accelerate the launch of AI mobile phones. AI adds vitality to the mobile phone market. Industry insiders believe that with the preparation and mass production of the iPhone 16 series, the mobile phone industry has entered the traditional peak season in the third quarter, and the industrial chain is showing a warming trend.

Most financial stocks rose. U.S. Bancorp rose more than 4%, Mastercard, Regions Financial, JPMorgan Chase, Travelers Insurance, Visa, and Wells Fargo rose more than 1%, Morgan Stanley, Mizuho Financial, Deutsche Bank, Citigroup, AIG, and American Express rose slightly, Capital One Financial, Goldman Sachs, Bank of America, and BlackRock closed slightly lower, and UBS fell more than 1%.

Goldman Sachs fell 0.17%. Goldman Sachs Group strategist Scott Rubner said the S&P 500 has no other way to go at its current level except to fall. He warned, "I won't buy on dips." The managing director of Goldman Sachs' global markets division cited data dating back to 1928, saying that this is because Wednesday, July 17, is historically a turning point in stock market returns, and the following August is usually the month with the heaviest outflow of funds from passive stocks and mutual funds. Unfavorable seasonal factors, excessive positions, and all good news have been digested by the market, all put the S&P 500 on the verge of a summer correction. This is also the view that Goldman Sachs' trading department has been leaning towards since at least early June.

Energy stocks generally rose. Chevron rose more than 2%, Apache Oil, Occidental Petroleum, BP, and ExxonMobil rose more than 1%, American Energy and Duke Energy rose nearly 1%, Shell, ConocoPhillips, Marathon Oil, Murphy Oil, Schlumberger, and Imperial Oil rose slightly, and Petrobras fell slightly.

Popular Chinese concept stocks closed down collectively, with the Nasdaq China Golden Dragon Index down 1.86%. NIO fell more than 6%, Futu Holdings fell more than 5%, Xpeng Motors, Weibo, and Bilibili fell more than 3%, Pinduoduo, Baidu, Li Auto, iQiyi, Tencent Music, and New Oriental fell more than 2%, Alibaba and Manbang fell more than 1%, and Douyu, JD.com, Huya, and NetEase fell slightly.

Editor: Li Dan

Proofreading: Zhu Tianting

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