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China Fund News Taylor

Brothers and sisters, let’s continue to pay attention to the situation in overseas markets tonight.

Nasdaq's big turnaround

After the U.S. stock market opened, the Dow Jones Industrial Average continued to rise, increasing by more than 300 points.

The shock in technology stocks seems to be fading. After a dismal trading day on Wall Street on Wednesday, major stock indexes all rose. The Nasdaq once plunged, falling nearly 2% during the session, and then quickly pulled up and turned positive, staging a "V-shaped" reversal!

Nvidia rose 1%, having fallen nearly 7% at the beginning of the session.

Among the "Seven Sisters" of U.S. stocks, Tesla rose nearly 3%, while Google and Microsoft fell slightly.

The sharp stock market swings put additional pressure on hot technology stocks after disappointing earnings from Tesla and Google parent Alphabet heightened concerns about stretched valuations and hype over artificial intelligence.

In terms of precious metals, the prices of gold and silver plummeted.

US economy grew 2.8% in second quarter

Far Exceeding Expectations

The United States released the latest economic data, showing that the U.S. economy accelerated in the second quarter as consumers increased spending, businesses increased equipment investment and increased inventories, and inflation cooled.

The U.S. Commerce Department said Thursday that gross domestic product -- the value of all goods and services adjusted for inflation and seasonality -- grew at an annualized rate of 2.8% in the April-June period. That was faster than the 1.4% pace in the first quarter and well above the 2.1% pace that economists had expected before the report.

Household spending, the main driver of the U.S. economy, increased 2.3% in the second quarter, accelerating from 1.5% in the first quarter. Spending on goods increased, while spending on services slowed slightly.

The report does not change the outlook for the Fed’s next move. Officials have said they expect to keep interest rates unchanged at next week’s meeting but could cut rates at their next meeting in September if inflation continues to cool.

Thursday’s report, one of the last major economic indicators that Fed officials will look at before they meet next week, suggested the U.S. economy remains on solid footing.

Capital Economics economist Stephen Brown said in a note to clients that second-quarter GDP growth of 2.8% annualized rate, better than expected, should make the Fed more comfortable when it keeps policy unchanged next week, but the recent easing of labor market conditions and signs of slowing price growth still mean there is a strong case for a rate cut at the September meeting.

Increased consumer and business spending offset negative impacts such as a decline in residential investment spending. The spring home buying season, usually the busiest time of the year for the real estate market due to high home prices and high mortgage rates, has been a poor year. Sales of existing homes fell for the fourth consecutive month in June, but prices hit record highs, keeping many potential buyers out of the market.

There was some good news on the inflation front, with the personal consumption expenditures price index rising 2.6% this quarter, down from 3.4% in the first quarter. Core PCE prices, which exclude food and energy (the longer-term inflation measure that the Fed pays more attention to), rose 2.9%, down from 3.7% in the previous period.

U.S. Treasury Secretary Janet Yellen said in a speech in Rio de Janeiro on Thursday morning that the GDP report "confirms that we are on a path of stable growth and falling inflation."

After the release of Thursday's macro data, the probability of a rate cut shown by the Chicago Mercantile Exchange's "Fed Watch" tool has not changed much, still with a 100% chance of a rate cut in September, but the probability of a rate cut in July is less than 10%.

Analyst Kristine Aquino said that the unexpected upward trend in U.S. economic growth and inflation indicators has solidified the market's belief that it is too early for the Federal Reserve to cut interest rates in July. Although former New York Federal Reserve Bank President Dudley believes that interest rates need to be lowered immediately, a September rate cut is still the basic expectation for traders. Nevertheless, they clearly believe that there will be more economic weakness in the last few months of this year as they continue to hold out hope for the possibility of a third rate cut before December.

Bullard, a former hawkish member of the Federal Reserve, commented on CNBC that the growth rate in the first half of the year was close to 2%, and the Federal Reserve may begin to hint that it is ready to cut interest rates in September. The latest economic data does not point to a recession, and productivity has not really improved. The economy is slowing down, but it is approaching the trend growth rate, which is a soft landing.