HTSC: How to understand the differentiated market trend of US stocks?

According to the information from Zhitong Finance and Economics APP, Huatai Securities released a research report stating that as signals of a cooling U.S. economy gradually increase, expectations of interest rate cuts are rising. Coupled with the AI theme driving the market, recently, U.S. stocks represented by the S&P 500 and the NASDAQ index have repeatedly hit new highs. However, there is significant internal differentiation, with the NASDAQ > Dow Jones, large caps > small caps, and growth > value. While there is seasonal support for U.S. stocks in July, Huatai Securities believes that volatility will increase, and they are closely monitoring important variables such as the July FOMC meeting, earnings season, and the U.S. presidential election. In terms of strategy, it is not recommended to chase highs. Instead, consider taking small profits or buying put options for short-term downside protection.

Key Points

Core Theme: How to understand the differentiated market of U.S. stocks?

The essence of the differentiation in U.S. stocks is "Only AI". Apart from the strong rise in technology stocks, other industries are generally weak. Although the overall sentiment in the U.S. stock market is not overheated, the NASDAQ has already shown signs of being "overbought". Positions in the technology sector have become crowded again, which is often a signal of temporary adjustment pressure in the market. While there is seasonal support for U.S. stocks in July, Huatai Securities believes that volatility will increase, and the short-term view may turn cautious at any time. They are closely watching important variables such as the July FOMC meeting, earnings season, and the U.S. presidential election. Specifically, it is not recommended to chase highs in operations. Consider taking small profits or buying put options for short-term downside protection and set stop-loss levels. Huatai Securities remains moderately positive on the mid-term market outlook for U.S. stocks in the second half of the year. However, in a conservative scenario, they do not have overly high expectations for the upside potential, while in an optimistic scenario, they maintain an open attitude towards U.S. stocks continuing to lead globally under the drive of AI.

Market Assessment: Domestic fundamentals tend to be "stable", focusing on the Third Plenum, U.S. presidential election

Recent domestic economic data tends to be "stable", with the focus on the effects of real estate policies and export expectations. Events such as the Third Plenum and the U.S. presidential election debate have attracted high attention. There are increasing signals of a cooling U.S. economy, with inflation data "cooling", and expectations of interest rate cuts slightly rising. In terms of monetary policy, constraints such as the RMB exchange rate, shadow banking, and net interest margin of banks limit the space for monetary policy easing. Interest rate cuts face internal and external constraints, and attention is on the central bank's subsequent statements on new benchmarks and transmission mechanisms for monetary policy. In terms of fiscal policy, the issuance of local government bonds has slowed marginally since June, and constraints such as the decline in land sales revenue and tightening of urban investment financing restrict broad fiscal policy, which may continue to be relatively tight. The focus of real estate policies has shifted to destocking, with policy effects more favorable for the secondary housing market. The transmission to new homes still needs to be observed, but it is difficult to falsify in the short term.

Allocation Suggestions: Focus on key levels in the bond market, and on the technology sector in the stock market

For the bond market, it is recommended to look for opportunities along the interest rate curve + continue to hold 2-year bonds + credit bonds with longer durations are better than sinking, with a focus on seizing opportunities for short-term trading in ultra-long bonds. For the stock market, it is recommended to seek opportunities from the supply-demand structure, chip logic, etc., such as the technology sector with lower resistance, high-quality small and medium caps that have been wrongly punished, and large cap leaders with stable chips. Short-term movements in U.S. bonds may be dominated by fluctuations, maintain allocation positions, and focus on trading opportunities to buy on highs (4.4~4.5%) and sell on lows (4.0~4.1%) for 10-year U.S. bonds. It is not recommended to chase highs in U.S. tech stocks, be cautious of sentiment falling under high valuations or performance not meeting expectations, and be aware of the pullback risk brought by the first presidential debate Commodities still face some downward pressure. Copper may see a period of consolidation after the fading of trading sentiment. Oil prices are likely to consolidate in the short term, with a focus on supply and demand changes as well as US crude oil inventory data