Without the support of Powell’s speech releasing dovish signals and spurred by positive economic data, U.S. Treasury prices plunged, short- and medium-term U.S. bond yields climbed strongly, and technology stocks led U.S. stocks lower, while retail-holding stocks such as GameStop, which regained the attention of retail investors, bucked the market.
The yield on the benchmark 10-year U.S. Treasury note had surged nearly 40 basis points this month, the biggest gain in four years, before breaking the 1.60% mark intraday this Thursday. The 10-year break-even Inflation rate, a measure of U.S. inflation expectations, is now about 2.2 percent, hovering near its highest level since 2014. The U.S. bond yield curve, another indicator of inflation expectations, is at its steepest in more than five years.
Commentary says investors are selling off those soaring tech stocks that fueled U.S. stocks to record highs in preparation for a pickup in inflation. Wall Street News has mentioned that if U.S. bond yields do not rise gradually and slowly, but pull up quickly, U.S. stocks will have trouble absorbing the impact. If stock prices do not match valuations, when yields rise, it is likely to squeeze out some of the bubbles in U.S. stock valuations, especially in technology growth stocks.
Overnight Highlights
In terms of economic data, the number of first-Time jobless claims in the U.S. last week was 730,000, close to the lowest level since the outbreak of the new crown Epidemic, lower than market expectations of 825,000, last week’s number was revised upward to 861,000; U.S. GDP in the fourth quarter of last year revised annualized chain of 4.1% growth, lower than the market expected growth rate of 4.2%, the previous value of 4.0%; U.S. durable goods orders in January rose 3.4%, the record The largest increase in half a year, the market expected an increase of 1.1%, December growth rate revised up to 1.2%.
ECB chief economist Lane said the ECB is closely monitoring longer-term nominal bond yields; hedging off the impact of the epidemic on inflation is only the first stage; sufficient monetary easing needs to be implemented over a longer period; the ECB is concerned about everything from the risk-free rate to bank loans and will be flexible in buying bonds to prevent excessive tightening.
On Wednesday GameStop (GME) announced that Chief Financial Officer Jim Bell would be leaving, saying his replacement would have to help accelerate the company’s transformation. Since then, Ryan Cohen, a director of GameStop who joined the company’s board last year through a share acquisition and a proactive investor who has championed the company’s transformation, tweeted a McDonald’s ice cream cone, complete with a frog emoji. Some analysts noted that Cohen’s tweet caught the attention of retail traders on Reddit forums, who may have been signaling for a renewed buy, which pushed up GME shares.
In addition, Citron, which announced in January that it was ending nearly two decades of short research and focusing on long opportunities, said Thursday that it had a $50 price target on eSports Entertainment (GMBL), arguing that GameStop should acquire the company in order to get out of its downhill retail business. This is seen as another push for GME’s share price to rise.
India issued new rules requiring social media such as Facebook and Twitter to provide the identities of users who post illegal content on their platforms, suggesting WhatsApp may have to reduce its level of privacy protection for users; Nifty, Google-owned YouTube and Amazon’s Prime Video are facing stricter censorship related to content involving violence, sex, insults and more.
tesla‘s Model 3 California production line has been temporarily shut down, according to the media, and Wedbush Securities analyst Dan Ives said the line time shutdown looks to run from Feb. 22 to March 7. We think the shutdown is more due to a chip shortage, although the situation is improving.
Coinbase, the largest U.S. cryptocurrency trading platform, officially released a prospectus to apply for a direct listing on Nasdaq and is expected to become the first publicly traded digital currency exchange.
Cathie Wood, the “Queen of Bulls” and CEO of ARK Investment Management, believes that Bitcoin has the potential to expand its market cap into the trillions of dollars and assesses it to be on par with Apple, which has less than half the market cap, while we are now talking about a reserve currency for the entire world of crypto assets. More and more companies are inclined to include bitcoin on their balance sheets, she said. Institutional investors are expected to move into bitcoin.
Michael Saylor, CEO of business intelligence software giant Microstrategy, which previously encouraged Musk to invest in bitcoin, said bitcoin investments are becoming a focus of corporate attention. The cryptocurrency market has the potential to become a $100 trillion market cap market.
JPMorgan believes investors should probably include bitcoin in their portfolios, and that it should probably be as much as 1% of them in order to improve the overall risk-adjusted return of the portfolio.
Tech stocks lead U.S. selloff, Tesla down nearly 8%, retail holdout stocks soar
The three major U.S. stock indexes opened collectively lower on Thursday and set new daily lows at midday, with the Nasdaq Composite Index falling by a maximum of more than 3% during the session, leading the decline in the three major U.S. stock indexes. The Dow Jones Industrial Average, which hit a record high on Wednesday, fell by more than 500 points during the day. The S&P 500 index fell more than 2% when it set a new daily low. Among the 11 major sectors of the S&P 500, the information technology (IT) sector, where leading technology stocks such as Apple are located, fell more than 3% and co-led the decline with non-essential consumer goods.
Apple, Google parent company Alphabet, Amazon, Facebook, Nifty, Facebook, the FAANMG six major technology stocks had all fallen more than 2% during the day. Tesla fell nearly 7.9% as it set a new daily low.
A number of retail holdout stocks surged. GameStop (GEM), which rose more than 100% on Wednesday, had gained more than 85% at the beginning of the session, before giving back nearly half of its gains and narrowing to less than 50%. GME, KOSS and Express all triggered trading halts. In addition, by the agency citron bullish electronic sports entertainment (GMBL) had risen nearly 40%.
Among the Chinese stocks, Ideal Auto, which reported its first quarterly earnings in the fourth quarter, had risen more than 10% in the pre-market and more than 1% at the beginning of the session, but turned lower in the early trading and fell more than 10% in the session. Beili Beili (B), which reported better-than-expected fourth-quarter results and a more than 100% increase in monthly paid subscribers after the bell on Wednesday, also rose more than 10% before the bell and was up more than 16% in early trading, maintaining its gains during the day.
European stocks resumed their decline, led by chemical stocks, Bayer fell more than 6%, oil and gas and mining stocks rose against the market
Pan-European stock indexes by the rise in Treasury yields and U.S. stock volatility, restarted the decline. The Euro Stoxx 600 index closed down 0.36% on Thursday, falling for two days before closing up 0.46% on Wednesday.
Among stocks, Milan-listed steel pipe manufacturing giant Tenaris European shares rose more than 13.7 percent to become the best-performing Stoxx 600 component. The division announced four-quarter earnings and revenue higher than market expectations, thanks to the recovery of the drilling business; German chemical giant Bayer shares plunged 6.4%, its four-quarter net profit fell sharply by 78% year-on-year, last year’s full-year net loss of 10.5 billion euros, 2019 net profit of 4.09 billion euros; despite four-quarter core profit better than market expectations, wine giant Budweiser shares still fell more than 6%.
Stoke 600 sectors, only six closed up on Thursday, thanks to higher Crude Oil and industrial metals, led by oil and gas and basic resources rose nearly 1.6% and 1%, respectively, insurance rose more than 0.8%, banks and telecommunications rose more than 0.5%, real estate rose to the bottom to close up less than 0.1%. Declining sectors, down nearly 2% of the chemical industry led the decline, Wednesday rose nearly 1.9% led by tourism and leisure fell nearly 1.5%, health care, Food and beverage also fell more than 1%, industrial products and services fell nearly 0.9%, other sectors fell no more than 0.6%, the bottom of the decline was down 0.05% of the retail and down 0.1% of the automotive and parts.
Major European stock indexes fell on Thursday in addition to the Spanish stock index, Western stocks rose for three days, British and French stocks ended a two-day streak of gains, just ended a two-day streak of losses in German stocks and Italian stocks restarted the decline. Germany‘s DAX 30 index closed down 0.69%, France’s CAC 40 index closed down 0.24%, the FTSE 100 index closed 0.11%, Italy’s FTSE MIB index closed down 0.15%, Spain’s IBEX 35 index closed up 0.58%.
The 7-year U.S. bond tender sale subscription times a record low 10-year U.S. bond yields soared more than 20 basis points
The U.S. Treasury bid $62 billion in seven-year Treasury bonds on Thursday, with a bid rate of 1.195% and a bid subscription multiple of 2.04, a record low, after six auctions with an average subscription multiple of 2.35. U.S. stocks at midday, after the bid results, the yield on the 10-year U.S. bond pulled up 5.02 basis points in the short term, refreshing the daily high to 1.1882%.
U.S. stocks at midday, the U.S. 10-year benchmark Treasury yield rose above 1.60%, the second consecutive day of intraday highs since February last year, the intra-day rise once reached 23 basis points, only Wednesday just a year ago for the first intraday breakthrough 1.40%.
Also at lunchtime, the 5-year U.S. bond yield once soared to 0.8617%, up about 26 basis points intraday. 2-year U.S. bond yield once rose to 0.1877%, up about 6 basis points intraday. 30-year U.S. bond yield once approached the 2.4% round figure mark, hitting a high of 2.3944%, up about 16 basis points intraday.
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