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Last night, U.S. stock markets plummeted.

Global crash

Among them, the S&P 500 index closed down 75.62 points, or 1.37%, at 5446.68 points. The Dow Jones Industrial Average closed down 494.82 points, or 1.21%, at 40347.97 points. The Nasdaq closed down 405.26 points, or 2.30%, at 17194.15 points.

Among them, most large technology stocks fell, with Tesla and Nvidia falling more than 6%, Intel falling more than 5%, Apple and Amazon falling more than 1%, Google and Microsoft falling slightly; Meta rose more than 4%.

Popular Chinese stocks also fell across the board, with the Nasdaq China Golden Dragon Index falling 3.35%. NIO fell more than 8%, Tencent Music fell more than 6%, Futu Holdings and Xpeng Motors fell more than 5%, and JD.com fell more than 4%.

European markets also suffered a collective slump.

Gold and silver performed strongly.

Intel plunges after market close

In addition, Intel's U.S. stocks fell more than 18% after the market closed.

On August 2, Intel released its second quarter financial report for fiscal year 2024. Revenue was $12.8 billion, down 1% year-on-year; net loss attributable to the company was $1.6 billion, while net profit attributable to the company in the same period last year was $1.5 billion, turning from profit to loss year-on-year; adjusted net profit attributable to the company not in accordance with US GAAP was $100 million, while adjusted net profit attributable to the company not in accordance with US GAAP in the same period last year was $500 million, a sharp year-on-year decrease of 85%.

Intel's second-quarter adjusted earnings per share and revenue both fell short of Wall Street analysts' expectations, and the company's outlook for third-quarter adjusted earnings per share and revenue was also far below expectations.

At the same time, Intel also announced that as part of a $10 billion cost-cutting plan, the company will cut more than 15% of its employees.

Three major reasons

There are three main reasons for the sharp drop in U.S. stocks.

First, the U.S. labor market continues to cool, and a number of indicators suggest that it has returned to pre-pandemic levels.

The number of first-time unemployment claims in the United States in the week ended July 27 was 249,000, higher than the expected 236,000 and the previous value of 235,000. The rebound in the number of first-time claims in the United States last week to the highest level in a year added to the positive news of interest rate cuts. The US data showed signs of economic slowdown again. The US ISM Manufacturing PMI in July was 46.8, significantly lower than the market expectation of 48.8 and the previous value of 48.5 in June. The shrinkage was the largest in eight months, exacerbating market concerns about a US recession.

Traders believe that the economic data supports a 100% chance that the Federal Reserve will cut interest rates three times this year, totaling 75 basis points.

Secondly, the Bank of England cut interest rates by 25 basis points for the first time since the beginning of 2020, and hinted that it would cut interest rates cautiously and slowly in the future, predicting that future inflation risks would maintain an upward trend. Bank of England Governor Bailey said not to cut interest rates "too quickly or too much."

However, there were differences in the UK's interest rate cut this time, and the UK Monetary Policy Committee decided to cut interest rates by a vote of 5 to 4.

Four members still voted to keep interest rates unchanged because they believed that UK inflation was not yet sufficiently under control.

In fact, the Bank of England also stated that the risk of rising inflation in the UK still exists.

Finally, the risk of geopolitical conflict has increased. According to Israeli Army Radio, according to informed sources, Hamas has indefinitely frozen negotiations on a ceasefire and personnel exchange agreement due to the death of Ismail Haniyeh, leader of the Political Bureau of the Palestinian Islamic Resistance Movement (Hamas).

Editor: Peng Bo

Proofreader: Peng Qihua