Chip giants drag down the S&P and Nasdaq, Intel warns of earnings, plunging over 10%, NVIDIA and AMD hit historical lows, crude oil surges over 6% in a week.

The favored indicator of the Federal Reserve shows that inflation is cooling down. The year-on-year growth of the US core PCE price index in December slowed down to 2.9%, which is lower than expected and the slowest growth rate since March 2021. At the same time, driven by strong wage growth, adjusted real personal consumption expenditures (PCE) increased by 0.7% month-on-month in December for two consecutive months, marking the largest monthly increase in nearly a year.

Commentators believe that the debate about whether the Federal Reserve will cut interest rates soon still exists. The signs of a soft landing are increasing, and the current expectation is still when the interest rate will be cut, rather than whether it will be cut. Compared to the data, the internal discussions within the Federal Reserve are more critical for the future. The improvement in the inflation situation gives the Federal Reserve room to cut interest rates this year, but Fed officials have been cautious about declaring victory over inflation and have stated that they would like to see sustained signs of inflation cooling down before taking action. Therefore, the Federal Reserve may adopt a wait-and-see approach at this stage. In addition, disruptions in shipping caused by the situation in the Middle East may lead to a rebound in commodity inflation in January.

After the release of the PCE data, traders expect the probability of a Fed rate cut in March to remain around 50%. US Treasury prices fell, yields accelerated their rise, and the yield on the benchmark 10-year US Treasury bond erased its intraday decline and approached the one-month high set last Friday. The decline in the Invesco DB US DLR Index TR Bullish Fund expanded, hitting a new daily low and continuing to fall from the six-week high set on Tuesday, but it maintained its momentum of weekly cumulative gains since the beginning of 2024.

The yield on the 10-year US Treasury bond rose slightly this week, while the yield on the 2-year US Treasury bond, which is sensitive to interest rates, fell. The overall market expectation for a Fed rate cut this year has declined, with the probability of a rate cut in March dropping from around 85% a week ago to around 45%, and the expected magnitude of rate cuts for the year dropping from 165 basis points a week ago to 133 basis points.

The overall market expectation for a Fed rate cut this year has declined, with the probability of a rate cut in March dropping to around 45%.

On Friday, US stocks opened lower, with the market affected by the earnings warnings from chip giants. Intel, which provided revenue guidance for the first quarter that fell far short of expectations, opened more than 10% lower, experiencing a rare heavy blow in over two years. KLA, which also provided guidance below expectations, also fell sharply. AI chip giants NVIDIA and AMD both fell from their record closing highs in recent days. The chip stock index gave up the cumulative gains of the first three days of this week, which set new historical highs, and fell to a one-week low, experiencing a weekly turnaround.

Most sectors, led by energy, supported the market's rise. American Express, which has a positive annual guidance, led the Dow Jones Industrial Average to rebound. However, some high-market-cap tech stocks such as Apple turned downward, putting pressure on the market, and the S&P and Nasdaq failed to successfully rebound during the trading session. Tesla rebounded from the eight-month low it hit after announcing its earnings, but Morgan Stanley warned that the stock price could further decline. Intraday, there was a temporary decline. This week, major US stock indices collectively rose. Leading stocks that released their earnings reports experienced volatility: despite a rebound on Friday, Tesla still experienced a double-digit decline for the week. Even though it fell back during the week, ASML, the highest-valued chip stock in Europe, rose more than 10%. Netflix, which continued to rise after its earnings report, saw an increase of nearly 20%.

In the foreign exchange market, although the US dollar weakened on Friday, the Japanese yen continued to decline. However, due to a sharp rebound after the Bank of Japan's meeting on Wednesday, it did not experience a weekly decline for the first time in a month. The offshore renminbi continued to fall on Friday, moving away from the two-week high set on Wednesday, but still had its best weekly performance since the beginning of the year, rising overall like Chinese concept stocks. Bitcoin accelerated its rebound on Friday, surging more than $2,000 at one point and approaching the $42,000 mark. It experienced a slight rebound for the week, but is still far from the two-year high it reached on the first day of the listing of the Bitcoin spot ETF two weeks ago.

In the commodity market, gold's gains expanded after the release of US PCE data, reaching a new daily high, but then continued to fall. Investors' attention shifted to the upcoming Federal Reserve interest rate meeting next week. Commentators believe that because the Fed's interest rate cuts may not be as fast as the market expects, the gold market is currently consolidating. However, the theme of interest rate cuts this year will continue to support the upward trend of gold prices. Gold continued to decline this week under the pressure of a strong US dollar, while base metals such as copper were boosted by the prospect of increased demand due to China's reserve requirement ratio cut, rising significantly for the week.

On Friday, a tanker belonging to the trade giant Toke was hit by a missile fired by Houthi militants while sailing through the Red Sea. This was described by the media as the most significant attack by the militants on a tanker to date. International crude oil prices experienced a slight increase but remained stable, continuing to reach new highs since the end of November. Its performance this week surpassed that of base metals. Brent crude oil had its largest weekly gain since the outbreak of the conflict in Yemen, and US crude oil had its best performance since the last week of August when Saudi Arabia and Russia extended their oil supply cuts. In addition to the positive policies in China, crude oil continued to be supported by supply concerns sparked by the situation in the Middle East, as well as new upward momentum: positive US GDP data, a larger-than-expected decline in US crude oil inventories last week, and a decrease in oil production.

S&P Ends Five-Day Winning Streak, Dow Hits New Record High, Intel Sees Largest Decline in Over Two Years, Tesla Falls Over 10% in Earnings Week, Netflix Rises 18%

The three major US stock indices opened lower, with mixed performance in the morning session. The Dow Jones Industrial Average, which opened more than 40 points lower, quickly turned positive and saw an increase of over 100 points in the morning, reaching a peak gain of nearly 170 points and over 0.4%. It experienced two minor declines during the midday session. The S&P 500 Index turned positive in the morning and saw an increase of nearly 0.3%, but then turned negative during the midday session. The Nasdaq Composite Index initially fell more than 0.4% but turned positive after more than an hour of trading. However, it was unable to sustain the gains and turned negative again at the beginning of the midday session, falling 0.5% to a new daily low.

In the end, only the Dow Jones Industrial Average closed higher, up 60.3 points or 0.16%, at 38,109.43 points, setting a new record high for two consecutive days. The S&P 500, which had set a new closing high for five consecutive trading days, fell 0.07% to 4,890.97 points. The Nasdaq, which had set a new closing high since January 4, 2022 for five consecutive days, fell 0.36% to 15,455.36 points, ending its five-day winning streak along with the S&P 500. S&P 500 failed to break through the 4,900-point mark this week.

The tech-heavy Nasdaq 100 index fell by 0.55%, while the Nasdaq Technology Market Cap Weighted Index (NDXTMC), which measures the performance of technology stocks in the Nasdaq 100 index, dropped by 1.09%. Both indices retreated after hitting record highs for six consecutive trading days. NDXTMC rose by 1.9% this week. The small-cap Russell 2000, which is dominated by value stocks, rose by 0.12% after two days of decline.

Major US stock indices posted gains this week, with the S&P 500 up by 1.06%, the Nasdaq up by 0.94%, the Nasdaq 100 up by 0.62%, and the Dow Jones Industrial Average up by 0.65%. The Russell 2000, which had been declining for four consecutive weeks, rebounded and rose by 1.75%.

Among the Dow Jones constituents, Intel led the decline on Friday, while other declining stocks fell by less than 2%. Among the gainers, American Express surged by over 7%, leading the pack, while Nike and UnitedHealth rose by about 2%, and Boeing rose by nearly 2%. In the S&P 500, four sectors ended the week without gains, with the IT sector, which includes chip stocks, falling by nearly 1.1%, real estate falling by nearly 0.4%, and industrials falling by over 0.1%. The materials sector saw a slight decline and almost remained flat.

Only three sectors posted declines this week, with the non-essential consumer goods sector, which includes Tesla, performing the worst with a 1.4% decline. The real estate and healthcare sectors fell by approximately 0.5% and 0.2% respectively. Among the eight sectors that posted gains, the energy sector led the way with a 5.1% increase, followed by the communication services sector, which includes Netflix and Google, with a 4.5% increase. The financial sector rose by 1.9%, while the other sectors rose by less than 1%.

In terms of individual stocks, most of the leading tech stocks rose. Tesla, which had fallen by 12% in the fourth quarter due to disappointing earnings, rebounded slightly. It initially rose by nearly 2.3% but later retreated, ending the day with a 0.3% gain. It temporarily moved away from the closing low since May 19, 2023, which was set during this week's earnings report release. The stock has fallen by over 13.6% this week.

Among the FAANMG stocks, Meta, the parent company of Facebook, maintained its upward momentum after a morning rebound, ending the day with a 0.2% gain and hitting a new closing high for four consecutive days. Alphabet, the parent company of Google, barely rose by less than 0.1% and hit a new closing high for three consecutive days. Netflix rebounded in the morning and closed with a 1.5% gain. The stock has been rising for three consecutive days since the earnings report release, reaching a two-year high. Microsoft and Apple both turned down after an initial rise in the morning session. Microsoft, which had reached a record high for three consecutive days, fell by 0.2%, while Apple fell by 0.9%, marking a three-day decline and moving further away from the closing high on December 19. Amazon maintained its upward trend throughout the day, closing up nearly 0.9% and setting a new closing high since April 2022 for the fourth consecutive day.

This week, the six major tech stocks all rose. Netflix, which surged more than 10% on Wednesday after the release of its earnings report, saw an 18% increase. Alphabet rose nearly 4%, Meta rose about 2.8%, Amazon rose 2.4%, Microsoft rose 1.3%, and Apple rose nearly 0.5%, with the smallest gain among the six.

Overall, chip stocks underperformed the broader market. The Philadelphia Semiconductor Index and the Semiconductor Industry ETF SOXX both fell by 2.9% and 2.7% respectively. After a five-day rally, they fell for two consecutive days, continuing to move away from the record closing high set over the past four days and hitting a low since January 18. They fell by nearly 0.8% and 0.6% respectively this week. Among individual stocks, AMD initially fell by 3.4% and NVIDIA fell by 1.7%, but both rebounded in the morning and afternoon sessions before ultimately closing down by 1.7% and nearly 1% respectively, falling from their respective record closing highs set over the past two and six days. They rose by 1.7% and 2.6% respectively this week, but the gains were much smaller than last week's increases of approximately 18.9% and 4.2%. Intel, which announced its earnings report, opened with a drop of nearly 11%, and fell by 11.9% after initially falling by 12.5%, marking its largest decline since October 2021. KLA, which also announced its earnings report, fell by over 7% in the morning session and closed down by 6.6%. Despite a lower-than-expected loss in the second quarter and better-than-expected guidance for the third quarter, Western Digital still fell by 3.5%.

Most AI concept stocks declined. Super Micro Computer (SMCI) initially rose but failed to reach 1%, and then fell by 0.3%, dropping from the record closing high set over the past five days. C3.ai (AI) fell by 0.2% at the close, while Palantir (PLTR) fell by 0.7%. SoundHound.ai (SOUN) and Adobe (ADBE) both fell by over 1%, while BigBear.ai (BBAI) rose by nearly 0.3%.

Most popular Chinese concept stocks declined for two consecutive days. The Nasdaq Golden Dragon China Index (HXC) initially fell by over 1% and closed down by nearly 0.5%, continuing to move away from the closing high set on Wednesday since January 12. It rose by approximately 3.9% this week. The Chinese concept ETFs KWEB and CQQQ both fell by approximately 1% and 1.8% respectively. The three new forces in the car-making industry had mixed performances at the close. Nio, which initially turned up, rose by over 1%, while XPeng fell by approximately 0.9% and Li Auto fell by 0.4%. Among other individual stocks, New Oriental, which had surged for two days after the release of its earnings report, fell by over 1%, but still rose by over 11% this week. Pinduoduo fell by nearly 2%, while NetEase and Tencent Music fell by over 1%. Baidu and Bilibili both fell by approximately 0.9%, JD.com fell by 0.3%, and Alibaba, which initially turned up in the morning session, rose by 0.2% at the close. In the stock market, American Express (AXP), which announced its earnings report, initially rose nearly 9% in early trading and closed up 7.1%, despite its fourth-quarter performance falling short of expectations but its annual guidance exceeding expectations. T-Mobile (TMUS), the telecommunications giant, saw its stock turn higher in early trading after its fourth-quarter EPS earnings fell below expectations but its revenue exceeded expectations. The stock initially rose nearly 2% but fell by midday, closing down nearly 0.3%. Despite beating expectations for the quarter, Visa (V) still closed down 1.7%.

In European stocks, the pan-European index rose for the third consecutive day, accelerating its upward trend with the support of strong performances from blue-chip stocks such as LVMH. Following Wednesday's largest gain in two months, the STOXX Europe 600 Index rose more than 1% in a single day, reaching its highest closing level since January 17, 2022. Major European stock indices rose together, with the world's largest luxury goods group LVMH and high-end spirits giant Pernod Ricard leading the gains in French stocks, which rose more than 2% and outperformed other European countries.

In various sectors, the personal and household goods sector, which includes luxury goods giants, rose nearly 5.3%, driven by a strong performance from LVMH, which saw a surprising rebound in sales in the fourth quarter, leading to a surge of 12.8%, the largest increase since March 2020. The food and beverage sector rose nearly 2.5%, mainly due to a 15.2% surge in Pernod Ricard's sales in the third quarter, which was slightly lower than expected, driving its competitors, Danone and Diageo, to rise by 7.9% and 5.1% respectively. However, the technology sector fell against the trend, declining by 0.8%, with ASML, the Dutch lithography machine giant, falling by 1.8%, its first decline since the release of its earnings report on Wednesday, but still up nearly 16.2% for the week due to a nearly 10% increase on Wednesday.

Due to significant gains on Wednesday and Friday, the STOXX Europe 600 Index rose more than 3% for the first time in a week since November 3, easily erasing the decline from the previous week. Stock indices in various countries rose together this week, with French stocks leading the gains, up more than 3%, and German stocks also erasing the decline from the previous week. British stocks, which had fallen for three consecutive weeks, Spanish stocks, which had fallen for two consecutive weeks, and Italian stocks, which had stopped their two-week rally last week, all rebounded.

In various sectors, despite a slight decline this week, the technology sector still accumulated an 8% gain thanks to the previous days' gains. The personal and household goods sector rose more than 7% after a strong surge on Friday, and the basic resources sector, which had the largest decline of 4.5% last week, rose more than 4%.

The two-year German bond yield fell more than 10 basis points in a week, and the ten-year US bond yield turned higher after the release of the PCE data, briefly approaching a five-week high.

European government bond prices were mixed, with UK bond yields continuing to fluctuate lower and overall lower opening and higher closing yields in the eurozone. At the end of the bond market session, the yield on the UK 10-year benchmark government bond closed at 3.96%, down about 2 basis points during the day, while the yield on the 2-year UK bond closed at 4.32%, down about 2 basis points during the day. The yield on 10-year German government bonds closed at 2.30%, up about 1 basis point during the day, but still below the seven-week high of 2.37% reached on Wednesday before turning lower. The yield on 2-year German bonds closed at 2.62%, up about 2 basis points during the day, still far from the intra-day high since December 1st.

European bond markets had mixed performances this week. UK bond yields continued to rise, reflecting better-than-expected January PMI data and dampening expectations of a rate cut by the Bank of England. The yield on 10-year UK bonds rose by about 4 basis points cumulatively, marking the fifth consecutive week of increase, while the yield on 2-year UK bonds rose by about 3 basis points cumulatively, marking the second consecutive week of increase. On the other hand, bond yields in the eurozone fell as market expectations of a rate cut by the European Central Bank strengthened after its meeting. The yield on 10-year German bonds fell by about 4 basis points cumulatively, ending a four-week streak of increase, while the yield on 2-year German bonds fell by about 11 basis points cumulatively, retracing its rebound from last week.

The yield on 10-year US Treasury bonds briefly fell to a daily low of 4.09% before European stock markets opened, then dropped by nearly 3 basis points during the day, but rebounded after the release of US PCE data. It quickly erased its intraday decline and accelerated its upward trend. The yield on 10-year US bonds rose above 4.16% during midday trading, approaching the high since the first day of the Federal Reserve's interest rate meeting on December 13th, and increased by nearly 5 basis points during the day. By the end of the bond market session, it was around 4.14%, up more than 2 basis points during the day. The yield on 10-year US bonds increased by about 2 basis points cumulatively this week, marking the second consecutive week of increase, but the increase was much smaller than the approximately 18 basis points increase last week.

The yield on 2-year US Treasury bonds, which is more sensitive to interest rate expectations, briefly fell to a daily low of 4.28% before European stock markets opened, then dropped by more than 1 basis point during the day, but stabilized above 4.30% after the release of US PCE data. It rose to nearly 4.37% during midday trading, up more than 7 basis points during the day, but still below the high of approximately 4.42% reached on January 5th. By the end of the bond market session, it was around 4.35%, up nearly 6 basis points during the day. The yield on 2-year US bonds fell by about 3 basis points cumulatively this week, marking the fifth week of decline in the past seven weeks.

Various maturities of US bonds had mixed performances this week, with long-term bond yields leading the increase and short-term bond yields falling.

After the release of US PCE data, the Invesco DB US Dollar Index TR Bullish Fund (DXY), which tracks the exchange rates of the US dollar against six major currencies including the euro, briefly rose during the Asian session, reaching a daily high above 103.70, up more than 0.1% during the day, approaching the intra-day high since December 13th when it rose above 103.80. However, it turned lower before the European stock market opened and extended its decline after the release of US PCE data, falling below the daily low of 103.20, down more than 0.4% during the day. The decline gradually narrowed after the US stock market opened. At the close of the US stock market on Friday, the Invesco DB US DLR Index TR Bullish Fund was below 103.50, down 0.1% for the day and up nearly 0.2% for the week. The Bloomberg Dollar Spot Index, which tracks the US dollar against ten other currencies, fell by less than 0.1% and was up 0.1% for the week. Both indices retreated after rebounding on Thursday and have been on an upward trend for four consecutive weeks since 2024.

Invesco DB US DLR Index TR Bullish Fund fell after the Bank of Japan meeting due to a sharp rebound in the yen, while the euro fell after the European Central Bank meeting, causing the US dollar to rebound.

Among non-US currencies, the yen, which fell during Thursday's trading session, continued to decline, but managed to halt a three-week losing streak for the entire week. The US dollar against the yen fluctuated upwards after the release of US PCE data, rising nearly 0.4% during the day and surpassing 148.20. It remained slightly higher than 148.10 at the close of the US stock market, roughly on par with the previous Friday's level. The euro against the US dollar quickly tested the high of 1.0900 after the release of US PCE data, rising 0.5% during the day, but later gave back most of its gains and failed to approach the high of 1.0930 reached on Wednesday. The British pound against the US dollar briefly approached 1.2760 after the release of US PCE data, nearing the high of 1.2770 reached on Wednesday after the UK PMI data, rising 0.4% during the day, but then continued to decline, hovering around the 1.2700 level at the close of the US stock market, with a slight decline during the day.

In the early Asian trading session, the offshore Chinese yuan (CNH) against the US dollar briefly hit a daily high of 7.1777, but quickly fell back. Before the European stock market opened, it fell to a daily low of 7.1932, down 155 points from the high, and then rebounded. The European stock market briefly turned higher in early trading, but overall it remained in a downward trend after the release of US PCE data. During the US stock market session, it briefly tested the 7.19 level to the downside, continuing to fall from the intra-day high of 7.15 reached on Wednesday, the highest since January 5. At 5:59 am Beijing time on January 27, the offshore Chinese yuan against the US dollar was reported at 7.1885 yuan, down 86 points from the New York closing on Thursday. After four consecutive gains, it has fallen for two consecutive days, with a cumulative increase of 151 points for the week, reversing a three-week losing streak and achieving a single-week cumulative increase for the first time since the beginning of 2024.

Bitcoin (BTC) continued to rise during the European and American trading sessions. It briefly tested $42,000 during the US stock market session, reaching a high not seen since last Friday, January 19. It rebounded more than $2,000 from the intra-day low of $39,900 reached during the Asian trading session, rising by about 6% and closing above $41,000 at the end of the US stock market session. It has risen more than 5% in the past 24 hours and about 0.6% in the past seven days, but is still far from the two-year high of $49,000 reached on the first day of the listing of the Bitcoin spot ETF on January 11. Bitcoin rebounded to $42,000 during Friday's trading, reversing the week-long decline.

Crude oil reached a new two-month high, with US oil experiencing its largest weekly gain in nearly four months, and Brent oil seeing its second-largest weekly gain since the Israel-Palestine conflict.

International crude oil futures remained mostly bearish on Friday, but reversed after the opening of the US stock market, with short-term gains in early trading. When it hit a daily low at the beginning of the afternoon session, US WTI crude oil fell below $76.10, down nearly 1.7% for the day, approaching $81.30. Brent crude oil fell nearly 1.4% for the day, but maintained its upward trend after the reversal. At the midday session, US oil rose above $78.20, up nearly 1.1% for the day, while Brent oil reached $83.60, up 1.4% for the day.

At the close, WTI March crude oil futures rose 0.84% to $78.01 per barrel, while Brent March crude oil futures rose 1.36% to $83.55 per barrel. Both US oil and Brent oil closed at their highest levels in nearly two months since the end of November last year.

After falling more than 1% during Friday's trading, US WTI crude oil rebounded and even exceeded 1%, breaking through the 200-day moving average.

For the second consecutive week and the seventh week out of the past 16 weeks since the Israel-Palestine conflict, crude oil prices rose. US oil futures for the current month rose by about 6.5% for the week, marking the largest weekly gain since September 1st. Brent oil rose by nearly 6.4%, marking the largest gain since the week of October 13th, which was the first week after the outbreak of the Israel-Palestine conflict.

US gasoline and natural gas futures both rose. NYMEX February gasoline futures rose 1.31% to $2.2941 per gallon, reaching a high not seen since October 27th. It rose by about 6.1% for the week, marking the third consecutive week of gains. After two consecutive gains, NYMEX February natural gas futures rose 5.48% to $2.7120 per million British thermal units, reaching a high not seen since January 17th. It rose by about 7.7% for the week, rebounding after a 24% drop last week, marking the fifth week of gains in the past six weeks.

London base metal futures continued to rise on Friday. London tin rose for the fifth consecutive day, reaching a new five-month high for three consecutive days. London nickel and London aluminum rose for the fourth consecutive day, with London nickel reaching a new high since the end of December, and London aluminum reaching a three-week high.

Gold fell after a high following the release of the PCE data, marking the second consecutive week of decline. London lead rebounded, approaching the two-month high set on Tuesday. London copper, which has risen for three consecutive days, fell from its high at the end of December, while London zinc continued to decline slightly from its three-week high set on Wednesday.

Basic metals have risen across the board this week. London tin rose by more than 5%, rising for three consecutive weeks; London lead rose by nearly 3%, rising for four consecutive weeks; London copper rose by more than 2%, rising for two consecutive weeks. London aluminum, London zinc, and London nickel, which had fallen for three consecutive weeks, rebounded, with London aluminum rising by about 5%, and London zinc and London nickel rising by about 4.7%.

New York gold futures rose to a daily high of $2028.1 after the release of PCE data before the US stock market opened, rising 0.5% intraday. However, it later gave up its gains, and US stocks turned lower in early trading. At midday, gold hit a daily low of $2015.6, down 0.1% intraday.

In the end, COMEX February gold futures closed down 0.02% at $2017.3 per ounce. After a slight rebound on Thursday, it failed to break away from the closing low since December 13, which was set last Wednesday.

Gold has fallen by 0.59% this week, declining for two consecutive weeks, but the decline has eased compared to the nearly 1.1% decline last week, which was the largest weekly decline in six weeks. Since the outbreak of the Israeli-Palestinian conflict, gold futures have fallen for four consecutive weeks, with three of them concentrated in January, starting with a "black opening" in the first week of January.

Spot gold is hovering around $2000, experiencing a similar decline as gold futures this week.