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The minutes of the Federal Reserve meeting released on Wednesday local time showed that most participants believed that a rate cut in September might be appropriate.

On August 21, local time, the three major U.S. stock indices closed higher. As of the close, the Dow Jones Industrial Average rose 0.14%, the Nasdaq rose 0.57%, and the S&P 500 rose 0.42%.

U.S. government data released on Wednesday showed that U.S. job growth in the year ending in March may be far less strong than previously reported. The preliminary benchmark revision of the U.S. Bureau of Labor Statistics showed that the number of non-farm payrolls in the above period may be revised down by 818,000, which is equivalent to a monthly decrease of about 68,000. The revision of employment is the largest since 2009.

In the market, popular Chinese concept stocks generally rose, with the Nasdaq China Golden Dragon Index up 2.39%. Vipshop rose more than 9%, Futu Holdings, Xpeng Motors, and Li Auto rose more than 4%, Weilai and Alibaba rose more than 3%, NetEase and Manbang rose more than 2%, Baidu rose 2%, Pinduoduo and Weibo rose more than 1%, Huya, iQiyi, Tencent Music, and Bilibili rose slightly, Douyu fell more than 2%, and JD fell more than 4%.

Fed meeting minutes show September rate cut is a done deal

On Wednesday, August 21, local time, the three major U.S. stock indexes closed higher. As of the close, the Dow Jones Industrial Average rose 55.52 points, or 0.14%, to 40,890.49 points; the Nasdaq rose 102.05 points, or 0.57%, to 17,918.99 points; and the S&P 500 rose 23.73 points, or 0.42%, to 5,620.85 points.

The S&P 500 rose 0.42%, with almost all major components rising. Less than 10 billion shares traded on U.S. exchanges, the lowest in six weeks. Target rose more than 10%, with second-quarter results exceeding expectations and raising full-year profit guidance. Macy's net sales in the second quarter were $4.94 billion, down 3.8% year-on-year, and fell nearly 13% by the close.

Wall Street traders pored over the minutes of the latest Federal Reserve policy meeting ahead of Federal Reserve Chairman Jerome Powell's speech at Jackson Hole.

The minutes of the Federal Reserve meeting released on Wednesday showed that "some participants believed that the increase in unemployment and recent progress in reducing inflation provided a reasonable reason for a 25 basis point rate cut at this meeting, or that they might have voted in favor of the rate cut." "The vast majority said that if economic data continued to meet expectations, it might be appropriate to cut interest rates at the next meeting."

In addition, most participants pointed out that the risks to the job market have increased, while the risks to the inflation target have decreased. Some participants are concerned that the gradual weakening of the labor market may evolve into a more serious deterioration. Nevertheless, policymakers believe that inflation has slowed down and progress has been made toward the 2% target, and they expect these trends to continue to put downward pressure on inflation in the coming months. The minutes also mentioned that the Fed's balance sheet reduction plan will continue to maintain its current progress, and participants expressed concern about the leverage risks in the U.S. Treasury market and the stability of the banking system, emphasizing the need to continue to monitor the monetary market environment and risks associated with non-bank financial intermediaries.

“The Fed minutes removed any doubts about a September rate cut,” said Jamie Cox of Harris Financial Group. “The Fed’s communication strategy was to make the meeting less market-moving, and they are sticking to the script.”

Brett Kenwell of eToro said: “The question is not if the Fed will cut rates in September, but by how much will the Fed cut? The market is currently pricing in a 25bp cut over a 50bp cut, which seems to be the more likely outcome at this point, assuming the August jobs report does not disappoint.”

Sam Marcelli of UBS Global Wealth Management said the environment remains favorable for stocks as the Federal Reserve prepares to cut interest rates and economic and earnings fundamentals remain strong. She believes that high-quality growth is still expected to outperform the market.

In other news, U.S. government data released on Wednesday showed that the country's job growth in the year ending in March may be far less strong than previously reported. The Bureau of Labor Statistics' preliminary benchmark revision showed that non-farm payrolls in the above period may be revised down by 818,000, which is equivalent to a monthly decrease of about 68,000 on a pro rata basis. Economists had generally expected a downward revision, and some even believed that it could fall by as much as 1 million. The final data will be released early next year. Non-farm data undergoes benchmark revisions every year, but this year's adjustment is closely watched by markets and Fed watchers as they look for clues that the labor market is cooling or faster than initially reported. Some economists said that the initially released non-farm payrolls data may be exaggerated by many factors, including adjustments for business creation and closures and the way unauthorized immigrant workers are counted.

After the release of the revised data on the total number of non-farm payrolls in the United States in March, Nick Timiros, the "Federal Reserve mouthpiece", commented on social media that US job growth was indeed not as strong as previously reported each month. Data showed that in the 12 months ending in March, the number of new jobs in the United States was 818,000 less than previously reported, which reduced the average monthly employment by 68,000 (previously 246,000). The specific revisions for each month will not be officially announced until February 2025. In addition to the total number of people, the report revised the employment level by 0.5%, the largest since 2009.

Evercore’s Krishna Guha said the sharply revised wage data would reinforce the Fed’s assessment that the labor market has been weakening amid restrictive policies and that the Fed needs to adjust interest rates in a timely manner to prevent that from widening further.

In other markets, the yields of US Treasury bonds were mixed, with the yield of 2-year US Treasury bonds rising 1.2 basis points to 4.072%, the yield of 3-year US Treasury bonds rising 1 basis point to 3.873%, the yield of 5-year US Treasury bonds falling 0.5 basis points to 3.76%, the yield of 10-year US Treasury bonds falling 1.4 basis points to 3.874%, and the yield of 30-year US Treasury bonds falling 1.7 basis points to 4.125%.

International oil prices fell across the board, with the October contract of U.S. crude oil falling 1.68% to $71.94 per barrel and the October contract of Brent crude oil falling 1.41% to $76.07 per barrel.

COMEX gold futures closed down 0.02% at $2,550.2 per ounce; COMEX silver futures closed up 0.38% at $29.63 per ounce.

NVIDIA releases the first AINPC game

In terms of sectors, 9 out of 11 sectors of the S&P 500 index rose and 2 fell. Among them, the materials sector led the gains with a 1.15% increase, while the financial and energy sectors fell by 0.14% and 0.01% respectively.

Most of the popular technology stocks rose. Texas Instruments and AMD rose by more than 2%, Intel rose by 2%, ASML, Meta, and Qualcomm rose by more than 1%, Tesla, Nvidia, Arm, and AMD rose by nearly 1%, Amazon, Cisco, Micron Technology, and Eli Lilly rose slightly, and Apple, Broadcom, Microsoft, Netflix, TSMC, and Google A fell slightly.

Microsoft fell 0.16%. Microsoft adjusted the reporting method of its business units on Wednesday, attributing some search and news advertising revenue to the Azure cloud computing division to show investors the contribution of AI more clearly. At the same time, Microsoft transferred the revenue of Nuance, an AI and voice technology service, to the productivity business unit, which includes the Office application suite. The move resulted in the restatement of the revenue growth of these departments in the previous fiscal year and the revision of the September quarter expectations. Although Microsoft's cloud business growth has slowed, the company said it will accelerate growth in the second half of fiscal 2025. After adjustments, Microsoft expects intelligent cloud revenue of US$23.8 billion to US$24.1 billion; revenue from Azure and other cloud services is expected to decline by 1 to 2 percentage points month-on-month in the first fiscal quarter; revenue from the productivity and business process divisions was raised to US$27.75 billion to US$28.05 billion.

Google A fell 0.80% and Apple fell 0.05%. The UK antitrust regulator closed its investigation into Google and Apple's app stores before the implementation of the new digital market law. The UK Competition and Markets Authority (CMA) said that once the new rules come into effect, its initial work will focus on the app store. These new laws will give the CMA broader powers, including large fines for companies that violate the rules. The Digital Markets, Competition and Consumer Bill, which is about to come into effect, will allow regulators to investigate companies designated as having a "strategic market position." The draft stipulates that fines can be up to 10% of a company's global annual revenue. "It is vital that UK technology companies, including app developers, have access to a fair and competitive app ecosystem to help grow the industry, promote investment, and deliver better outcomes for UK consumers," said Will Hite, executive director of digital markets at the CMA.

In addition, Matt Fisher, the long-time head of Apple's App Store, will leave as part of a company restructuring. Apple's changes are reportedly in response to global regulatory scrutiny.

NVIDIA rose 0.98%. NVIDIA released a game demo on Wednesday, where players can communicate with NPCs through voice dialogue, understand level goals, optimize equipment configuration, and then adjust weapon colors to start fighting. NVIDIAACE is a platform that allows developers to create intelligent game NPCs through generative AI. In short, ACE can create unprecedented full-voice, full-motion video game characters.

Tesla rose 0.98%. A federal judge dismissed a lawsuit accusing X Inc, formerly known as Twitter, of forcing disabled employees to leave after Elon Musk took over the company. Judge Martinez-Holguin said on Wednesday that banning remote work does not constitute disability discrimination. Plaintiff Dmitry Borodaenko, a cancer survivor and former engineering manager, claimed that he was fired for refusing to return to the office during the pandemic. The judge held that the plaintiff failed to specify how Musk's policy requiring employees to return to the office specifically affected disabled employees, and gave him four weeks to file a more detailed amended lawsuit. The case is one of several lawsuits filed by former employees after Musk acquired X Inc, some of which accused the company of not notifying layoffs in advance, not paying promised severance pay, and targeting women and older employees for layoffs.

Financial stocks fell more than they rose. American Express fell more than 2%, Citigroup, Wells Fargo, and Capital One Financial fell more than 1%, Mastercard, Regions Financial, Goldman Sachs, Morgan Stanley, U.S. Bancorp, and Travelers Insurance fell slightly, JPMorgan Chase, Visa, Bank of America, Mizuho Financial, BlackRock, AIG, and UBS rose slightly, and Deutsche Bank rose more than 1%.

Energy stocks were mixed, with Chevron, BP, Imperial Oil, Schlumberger, Duke Energy, and Murphy Oil rising slightly, while Shell, Marathon Oil, American Energy, ConocoPhillips, Occidental Petroleum, ExxonMobil, and Petrobras falling slightly, and Apache Oil falling nearly 1%.

Popular Chinese concept stocks generally rose, with the Nasdaq China Golden Dragon Index up 2.39%. Vipshop rose more than 9%, Futu Holdings, Xpeng Motors, and Li Auto rose more than 4%, Weilai and Alibaba rose more than 3%, NetEase and Manbang rose more than 2%, Baidu rose 2%, Pinduoduo and Weibo rose more than 1%, Huya, iQiyi, Tencent Music, and Bilibili rose slightly, Douyu fell more than 2%, and JD fell more than 4%.

Vipshop surged 9%. On the news front, Vipshop released its second quarter 2024 financial report showing that in the second quarter, the company achieved revenue of 26.9 billion yuan and Non-GAAP net profit of 2.2 billion yuan; GMV was 50.6 billion yuan, the same as the same period last year. The number of super VIP (SVIP) active users increased by 11% year-on-year, contributing 47% of online consumption. At the same time, Vipshop's board of directors approved a new stock repurchase plan, allowing the company to repurchase no more than $1 billion of American depositary shares or Class A common stock within 24 months after completing the existing stock repurchase plan.