Powell's speech and data meet expectations for interest rate cuts, US stocks and bonds plummet, NVIDIA hits new highs again, Tesla falls nearly 7% at one point.

Federal Reserve Chairman Powell stated last weekend that the Fed will be cautious in cutting interest rates this year, possibly waiting until after March to do so. He reiterated that the Fed wants to see more economic data to ensure that inflation falls to the target of 2%, and warned that the danger of cutting rates too early is that the task of reducing inflation has not been fully completed. Subsequently, journalist Nick Timiraos, also known as the "New Fed News Agency," wrote that the timing of rate cuts has become the current focus of the Fed. Powell emphasized two points: 1. The Fed will not wait for the inflation rate to reach 2% before cutting rates; 2. He hopes to have more confidence in bringing inflation down to 2%.

Powell once again poured cold water on market expectations of a rate cut in March. Following the unexpectedly strong non-farm payroll data released last Friday, the data released at the beginning of the US stock market session showed that the economy is hotter than expected: The US ISM Non-Manufacturing Index for January rebounded higher than expected to a four-month high, with new orders and the price index reaching nearly a one-year high.

After Powell's speech and the release of economic data, pricing of interest rate swap contracts showed that the probability of a rate cut by the Fed in March has almost dropped to zero during the trading session, and the probability of a rate cut in May continues to decrease. Both US stocks and bonds fell, with US Treasury prices continuing their decline from last Friday, and US bond yields rising sharply for two consecutive trading days, climbing at least 10 basis points. The yield on the two-year US Treasury bond, which is sensitive to interest rates, rose to a one-month high. The three major US stock indices, which have been rising for several days, collectively fell back. Meanwhile, the US dollar index strengthened further as rate cut expectations diminished, reaching its highest level since November last year.

The market's probability of a rate cut by the Fed in March fell to less than 15% on Monday, and the probability of a rate cut in May dropped to about 60%.

In the commodity market, under the pressure of a stronger US dollar, base metals such as copper and precious metals such as gold fell together. However, international crude oil, which has been falling for several days, rebounded during the trading session. The tension in the Middle East and the escalating conflict between Russia and Ukraine have increased concerns about supply, causing oil prices to rise by more than 1% at one point, breaking out of a three-week low. According to Xinhua News Agency, Ukrainian media reported that over the weekend, two unmanned drones attacked the primary refining facilities of the Volgograd Refinery, one of Russia's largest refineries. The attack, planned by the Ukrainian National Security Bureau, will have a serious impact on the refinery's production capacity. The Ukrainian National Security Bureau will continue to attack Russian refineries.

The three major US stock indices end two consecutive gains, Tesla performs the worst among the seven major tech stocks, chip stocks continue to rise against the market, Nvidia hits a new all-time high for three consecutive days

The three major US stock indices opened lower and continued to decline in early trading. The Dow Jones Industrial Average fell more than 430 points at one point, down more than 1.1% intraday. The S&P 500 Index fell more than 0.8% in early trading. The Nasdaq Composite Index fell 1% in early trading, but then narrowed its decline to less than half.

In the end, all three major indexes closed lower after two consecutive days of gains. The Dow Jones Industrial Average fell 274.30 points, or 0.71%, to 38,380.12, dropping from the record high set in the previous two days. The S&P 500, which reached a record high on Friday, fell 0.32% to 4,942.81. The Nasdaq Composite, which closed at its highest level since January 3, 2022, on Friday, fell 0.2% to 15,597.68.

The small-cap Russell 2000, which is dominated by value stocks, fell more than 2% in early trading and closed down 1.3%, reaching its lowest level since January 18. The tech-heavy Nasdaq 100 Index fell nearly 1% in early trading and closed down 0.17%, dropping from the record high set on Friday. The Nasdaq Technology Market Cap Weighted Index (NDXTMC), which measures the performance of technology stocks in the Nasdaq 100 Index, initially rose nearly 0.5% but then turned negative in early trading, falling more than 0.5% at its lowest point before closing up 0.51%, setting a new record high from Friday.

In the Dow Jones Industrial Average, McDonald's (MCD), which reported lower-than-expected fourth-quarter revenue and reflected the impact of the Middle East conflict on its performance, fell 4.6% at one point and closed down 3.7%, marking its largest decline since around May 2022. Boeing (BA), which discovered new quality issues with some undelivered 737 Max aircraft that could delay the delivery of about 50 aircraft, fell 3.5% in early trading and closed down 1.3%. Caterpillar (CAT), which reported higher-than-expected fourth-quarter earnings, initially rose more than 6% and closed up 2%, setting a new closing high.

Among the major sectors of the S&P 500, only the IT and healthcare sectors, which include chip stocks, closed higher on Monday, with gains of nearly 0.6% and 0.3% respectively. Among the nine sectors that closed lower, materials led the decline with a drop of more than 2.5%, followed by utilities and real estate, both down 2%. Non-essential consumer goods, including Tesla, fell 1.3%.

Leading tech stocks had mixed performances. Among the seven major tech stocks, including Apple, Microsoft, Alphabet, Meta, Amazon, Nvidia, and Tesla, Tesla performed the worst. After Piper Sandler significantly lowered its target price by 23.7% to $225 and media reports that German software giant SAP removed Tesla from its own automotive supply chain, Tesla fell nearly 6.9% in early trading and closed down nearly 3.7%, marking its lowest closing level since May 2023.

Among the six FAANMG tech stocks, Meta, the parent company of Facebook, which surged 20% after its earnings release on Friday, fell 3.3%, dropping from the record high set in the previous two days. Amazon, which rose nearly 8% after its earnings release on Friday, reaching a three-year high, fell more than 1% in early trading and closed down nearly 0.9%. Last Friday, Microsoft, which had risen for two consecutive days and reached a historical high, fell by nearly 1.4%. Netflix, which initially rose by nearly 2%, turned down in early trading and closed down by nearly 0.5%. Apple, on the other hand, rose by over 1% in early trading and closed up by nearly 1% after the release of Vision Pro and the expectation from CEO Tim Cook and other executives that the mixed reality headset would bring significant opportunities to the business world. Alphabet, the parent company of Google, also closed up by nearly 1%, rising for three consecutive days and recovering from the more than 7% drop after the earnings report released last Wednesday, reaching a new closing low since January 8th.

Overall, chip stocks continued to rise against the market. The Philadelphia Semiconductor Index and the Semiconductor Industry ETF SOXX both closed up by nearly 1.2% and 1.4% respectively, rising for three consecutive days and reaching a new closing high since January 25th. Among individual stocks, Nvidia, whose target price was raised by Goldman Sachs to $800 and closed nearly 21% higher than the previous Friday, saw its stock price rise by over 5% in early trading and closed up by approximately 4.8%, setting a new closing high for three consecutive trading days. AMD, which had higher-than-expected fourth-quarter revenue and profits, rose by 9.5%, Qualcomm rose by over 1%, Intel initially turned down but slightly rebounded in early trading, closing up by 0.4%, and NXP Semiconductors, which announced higher-than-expected fourth-quarter profits and revenue after hours, rose by 2.8%. On the other hand, AMD, which initially rose by over 1% in early trading, turned down and closed down by nearly 2%.

AI concept stocks showed mixed performance. At the close, C3.ai (AI) and BigBear.ai (BBAI) fell by over 3%, SoundHound.ai (SOUN) fell by over 4%, Adobe (ADBE) fell by nearly 0.7%, while Super Micro Computer (SMCI) rose by over 14%, setting a new closing high for four consecutive days since last Thursday. Palantir (PLTR), which closed down by 1.7%, announced higher-than-expected fourth-quarter revenue after hours and achieved annual profitability for the first time, stating strong demand for AI. Its stock price rose by over 10% after hours.

Most popular Chinese concept stocks rebounded. The Nasdaq Golden Dragon China Index (HXC), which initially fell by over 0.9%, slightly rebounded in early trading and closed up by 0.2%, recovering from the closing low since January 22nd last week. The Chinese concept ETFs KWEB and CQQQ closed up by over 1% and 0.2% respectively. Among individual stocks, at the close, Alibaba rose by nearly 4%, JD.com rose by nearly 3%, Tencent Music Entertainment Group rose by over 2%, NetEase and Bilibili rose by over 1%, Baidu rose by 0.8%, while XPeng Motors fell by nearly 4%, Nio fell by approximately 3%, Pinduoduo fell by nearly 3%, New Oriental Education & Technology Group fell by over 2%, and Li Auto fell by over 1%. The banking sector index, which had experienced two consecutive days of sharp declines, returned to a downward trend last Friday. The overall banking industry indicator, the KBW Bank Index (BKX), fell by nearly 1.3%, hitting a new closing low since January 18th, which was set last Thursday. The regional banking index, the KBW Nasdaq Regional Banking Index (KRX), fell by nearly 1.9%, dropping to its lowest level since November 30th, 2023. The regional banking stock ETF, the SPDR S&P Regional Banking ETF (KRE), fell by nearly 1.7%, hitting a new closing low since December 6th.

Regional banking ETF returns to a downward trend after rebounding last Friday.

Among regional banks, New York Community Bank (NYCB), which rebounded by over 5% last Friday but experienced a cumulative decline of 42% throughout the week, fell by 10.6%. Zions Bancorporation (ZION), which rose by 1% last Friday, fell by nearly 2%. Western Alliance Bancorporation (WAL), which rose by 1.8% last Friday, also fell by nearly 2%.

Among the stocks with significant volatility, Estée Lauder (EL), the cosmetics giant, initially rose by 19% after announcing second-quarter revenue and earnings that exceeded expectations, as well as a larger restructuring plan that includes laying off up to 3,000 employees. The company expects the restructuring to increase its operating profit by $1.1 billion to $1.4 billion. This was the largest intraday gain since November 2011, and the stock closed with a 12% increase. Everbridge (EVBG), an enterprise software company, rose by nearly 20% during trading after announcing that it will be acquired by private equity firm Thoma Bravo for $1.1 billion in cash. The stock closed with an 18.4% increase. Catalent (CTLT), a biopharmaceutical company and a key outsourced manufacturer of the weight-loss drug Wegovy, rose by over 10% in early trading and closed with a 9.7% increase after its parent company, Nohow Holdings, announced a $11 billion cash acquisition. On the other hand, Air Products and Chemicals (APD), an industrial gas and chemicals supplier, fell by nearly 15.6% due to lower-than-expected first-quarter revenue and earnings. Zscaler (ZS), a cybersecurity company that announced the resignation of its Chief Operating Officer last Friday, fell by 6% during trading and closed with a 4.9% decrease.

Expectations of interest rate cuts by central banks also weighed on European stocks. The pan-European stock index fell during Monday's trading session. The STOXX Europe 600 Index initially rose by nearly 0.4% during midday trading, but later fell and closed with a decrease of less than 0.1%, hitting a new closing low since January 25th. Most major European country stock indices declined, with the German, French, and Spanish stock indices falling after rebounding last Friday, while the UK stock index experienced a four-day decline and the Italian stock index rose for two consecutive trading days. In various sectors, retail revenue fell by about 2%, and the basic resources sector, which was hit by the decline in metal prices, fell by over 1.6% in the mining stocks. The healthcare sector bucked the trend and rose by over 1%, thanks to the announcement of the parent company's acquisition of Catalent. Danish-listed Novo Nordisk rose by 3.6%, reaching a new closing high. Among other individual stocks, it was reported that Iran secretly transferred funds through bank accounts to evade sanctions, causing Spain's largest bank, Santander, to fall by 5%, dragging down the Spanish stock index by over 1%, making it the worst-performing among all countries. On the other hand, UniCredit, an Italian bank, surged by 8.1% after reporting better-than-expected fourth-quarter results and expressing its intention to increase shareholder returns, reaching a new high in over eight years and supporting the continued rise of the Italian stock index.

US Treasury yields rise more than 10 basis points for two consecutive days, with the 2-year yield reaching a one-month high

European government bond prices continued to fall, and yields followed suit. At the end of the bond market, the yield on the UK's 10-year benchmark government bond closed at 4.00%, rising by about 9 basis points during the day. Since the release of the US non-farm payroll report, it has risen by a total of about 26 basis points in the past two trading days. It reached 4.04% during Monday's trading, hitting a high since January 25, and the 2-year UK bond yield closed at 4.48%, rising by about 9 basis points during the day and a total of about 28 basis points in the past two days. The yield on the 10-year benchmark German government bond closed at 2.31%, rising by about 7 basis points during the day, and it briefly rose above 2.33% during the trading session, hitting a high since January 25. It rose by about 17 basis points in the past two days. The 2-year German bond yield closed at 2.60%, rising by about 5 basis points during the day and a total of about 16 basis points in the past two days.

The yield on the 10-year benchmark US Treasury bond fell below 4.05% in the early Asian session, then continued to rise, breaking through 4.10% during European stock trading, and briefly surpassing 4.17% during early US stock trading. It rose by over 15 basis points during the day, rising by more than 10 basis points for two consecutive trading days, hitting a high since January 25, and continuing to move away from the low of 3.82% reached on Thursday last week, which was the lowest since December 27. It closed at about 4.16% at the end of the bond market, rising by about 14 basis points during the day.

The 10-year US Treasury yield tests 4.17% during the trading session, reaching a new high in over a week.

The 2-year US Treasury yield, which is more sensitive to interest rate prospects, fell below 4.40% during the early Asian session, and came close to 4.48% during US stock trading, hitting a high since January 5. It rose by over 11 basis points during the day, surpassing 10 basis points for at least the second consecutive trading day since last Friday. It closed at about 4.47% at the end of the bond market, rising by about 11 basis points during the day, along with the 10-year US Treasury yield, both rising for two consecutive days. US Treasury yields rose more than 10 basis points across all maturities on Monday.

The ICE US Dollar Index (DXY), which tracks the exchange rate of the US dollar against six major currencies, maintained its upward trend throughout the day on Monday. During the Asian session, it briefly fell below 104.00, but continued to rise during the European trading session. It even surpassed 104.60 during the early trading session of US stocks, reaching its highest level since November 14, 2023, and rose nearly 0.7% during the day.

By the end of Monday's US stock market session, the US Dollar Index was above 104.40, up nearly 0.5% during the day. The Bloomberg Dollar Spot Index, which tracks the US dollar against ten other currencies, rose by about 0.4%, reaching its highest level since November 17 last year. Both the US Dollar Index and the Bloomberg Dollar Spot Index have risen for two consecutive trading days.

Non-US currencies continued to decline, with the euro against the US dollar approaching 1.0720 during the early trading session of US stocks, reaching its lowest level since November 14. It fell nearly 0.6% during the day. The Japanese yen, which had fallen further after a decline last Friday, rose by over 0.3% during the day, with the USD/JPY approaching 148.90 during the early trading session of US stocks, reaching its highest level in two months. The British pound against the US dollar fell below 1.2520 during the early trading session of US stocks, reaching its lowest level since December 23, and fell nearly 0.9% during the day.

During the Asian session, the offshore Chinese yuan (CNH) against the US dollar reached a daily high of 7.2085. However, it fell during the pre-market trading session of European stocks and reached 7.2245 during the early trading session of US stocks, falling below 7.22 for the first time since January 18, with a decline of 160 points from the daily high. At 5:59 am Beijing time on February 6, the offshore yuan against the US dollar was reported at 7.2201 yuan, down 54 points from the New York closing on Friday, falling for four consecutive trading days.

Bitcoin (BTC) fell below $42,300 during the early Asian session, but rebounded. It rose above $43,000 during the pre-market trading session of European stocks and even surpassed $43,500 during the pre-market trading session of US stocks, reaching its highest level since Wednesday, January 31. It rose more than $1,000 from the daily low, up over 3%, but then fell back. During the early trading session of US stocks, it fell below $43,000 again, and hovered around $42,400 at the close of the US stock market, falling more than 1% in the past 24 hours. Some commentators believe that the price was influenced by reports of Genesis Trading, a cryptocurrency lending platform, applying for liquidation of over $1.6 billion in cryptocurrencies. Bitcoin rose above $43,000 during the trading session before falling back below $43,000.

Crude oil halted its three-day decline and rebounded from a three-week low during the trading session. When US stocks hit a daily low in early trading, US WTI crude oil approached $71.40, down 1.2% for the day, while Brent crude oil approached $76.60, down over 0.9% for the day. However, both rebounded and maintained their upward momentum near midday. During the midday session, US oil approached $73.30, up nearly 1.4% for the day, and Brent oil rose above $78.30, up about 1.3% for the day.

In the end, crude oil rebounded after three consecutive days of decline. WTI March crude oil futures closed up $0.50, or 0.69%, at $72.78 per barrel, while Brent April crude oil futures closed up $0.66, or 0.85%, at $77.99 per barrel. Both prices moved away from the closing lows set on January 10th and January 11th, respectively.

US WTI crude oil briefly rose above $73 during the trading session.

US gasoline and natural gas futures both rose. NYMEX March gasoline futures closed up 2.87% at $2.2092 per gallon, rebounding from the low set on January 17th. NYMEX March natural gas futures closed up 0.14% at $2.082 per million British thermal units, continuing to move away from the closing low set on April 2023.

London base metals futures fell across the board on Monday, with most falling by at least 1%. London tin led the decline, falling nearly 2.8% to a new low since mid-January, along with London aluminum, which has fallen for three consecutive trading days and reached a two-week low. London copper, zinc, and lead all fell for four consecutive days, with London copper closing below $8,400 for the first time in two weeks, London lead hitting a two-week low, and London zinc falling to its lowest level in nearly two months since early December. London nickel, which saw a slight rebound last Friday, fell back to a two-week low.

New York gold futures maintained their downward trend after falling in the early Asian session, with US stocks hitting a daily low of $2,030.8, down 1.1% for the day. In the end, gold futures fell for two consecutive trading days.

COMEX April gold futures closed down nearly 0.53% at $2,042.9 per ounce, moving away from the near three-week closing high set when it rose above $2,070 on Thursday, and hitting a low since last Monday, January 29th. Spot gold fell below $2,015 in pre-market trading in the US, hitting a low not seen since January 25th. It dropped 1.2% during the day and hovered around $2,025 at the close of the US stock market, down about 0.7% for the day.

Spot gold fell to a more than one-week low during the trading session, but found support around the $2,020 level.