Breakfast | The Dow Jones Industrial Average has risen for eight consecutive days, while Chinese concept stocks collectively celebrate. The first battle of US technology stock earnings reports ended in failure.
S&P and NASDAQ Composite Index both rose on the seventh day of the eight trading days. Meta and Netflix hit their highest levels in 18 months during intraday trading, but both Netflix and Tesla disappointed with their financial reports and experienced a sharp decline after hours. Musk mentioned the possibility of further price reductions. Apple was reported to be testing Apple GPT and making efforts to challenge OpenAI with its generative AI tools. Nissan in Japan will adopt Tesla's charging standard starting from 2025. Pony Ma, the CEO of Tencent, wrote an article in response to the State Council's support for the private economy.
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Market Overview
Netflix and Tesla plunge after hours, dragging down NASDAQ Composite Index futures by 0.7%
In the Asia-Pacific session, NASDAQ 100 futures fell by about 0.7%, while S&P 500 futures dropped by 0.3%. Netflix (after-hours trading) plummeted over 9%, Tesla fell over 4.2%, C3.ai dropped 1.3%, and Meta declined by over 1.2%.
US stocks opened higher and remained at over 15-month highs. By the close, both the S&P and NASDAQ Composite Index rose for the seventh consecutive trading day, reaching the highest level since April 4 last year. The Dow Jones extended its winning streak to eight days, the longest since September 2019, and reached the highest level since April 20 last year. Russell small-cap stocks rose for the eighth day in nine, hitting the highest level in over five months since February 3: the S&P 500 index rose by 0.24%, the Dow Jones rose by 0.31%, and the NASDAQ Composite Index rose by 0.03%.
Leading technology stocks generally rose. Meta rose by 1.3%, Netflix rose by 0.6%, both hitting 18-month highs; Amazon rose nearly 2% to a ten-month high, and Apple rose by 0.7% to a new all-time high. Tesla fell by 0.7%, ending its six-day winning streak. Microsoft fell by 1.2%.
Popular Chinese concept stocks surged, with JD.com rising by 1%, Baidu reversing to a 0.4% decline, and Pinduoduo reversing to a 0.6% decline. Alibaba and Bilibili rose by 1%, Tencent ADR traded nearly flat, NIO rose by over 2%, XPeng rose by over 4%, and Li Auto rose by approximately 1%.
Poor start for US tech stock earnings reports
Netflix plunged 9% after hours, while Tesla fell over 4%. After the US stock market closed on Wednesday, Tesla and Netflix both released their second-quarter earnings. Tesla's price reduction impacted profitability, with gross margins falling below 20% as expected. Netflix's second-quarter revenue and third-quarter performance guidance fell short of market expectations.
Top Stocks
Tesla's second-quarter revenue exceeds expectations, surging 47% to a record high, but gross margins hit a four-year low due to price cutsTesla's Second Quarter Earnings Call
Elon Musk: Tesla's production in the third quarter slightly declined due to factory upgrades, but I have "very high confidence" in Tesla's long-term value. It is reasonable to sacrifice profit margin for increased vehicle production. If the macro environment cannot remain stable, we may have to lower car prices. By 2024, we will invest $1 billion in the supercomputer DOJO.
Tesla's "Supercharging Alliance" Expands to Japan: Nissan to Adopt Tesla Charging Standard from 2025
On Thursday, Nissan announced that it has reached an agreement with Tesla to adopt Tesla's customized North American charging standard (NACS) starting from 2025. Nissan is the first Japanese automaker to announce support for NACS in the future.
Netflix's Second Quarter Revenue and Performance Guidance Fall Short of Expectations, User Growth Exceeds Expectations
Second quarter revenue was $8.19 billion, lower than analysts' expectations of $8.30 billion. It is expected that third quarter revenue will grow significantly by 7.5% YoY to $8.52 billion, lower than the market's expectation of $8.67 billion. In addition, a few hours before the financial report was released, Netflix announced the cancellation of its lowest-priced $9.99/month ad-free subscription plan.
Market Value Soars by $60 Billion in Seconds! Apple Reportedly Testing Apple GPT, Making Efforts in Generative AI Tools to Challenge OpenAI
It has been reported that Apple is developing its own generative AI tool. Last year, Apple created its own framework called Ajax to build large language models and unify its machine learning development. With Ajax, Apple has developed a chat tool similar to ChatGPT, internally referred to as Apple GPT.
Amazon Web Services: Supports Meta's Latest Llama 2 Base Model
Amazon Web Services customers can use the Llama 2 base model developed by Meta through Amazon SageMaker JumpStart.
Pony Ma of Tencent Responds to State Council's Opinion on Supporting Private Economy: Striving to Achieve Greater Contributions in High-Quality Development"Implementing the spirit of the 'Opinions', we will continuously increase our efforts in independent innovation and actively participate in the integration of data and reality, striving to play a leading role as a top company in the Internet industry."
"The European Commission will launch a formal antitrust investigation against Microsoft next week."
Microsoft is bundling video conferencing and chat tool Teams with its office software Office. The deadline for Microsoft's acquisition of Activision Blizzard has been extended to October 18. Both parties have made new business arrangements for this transaction. If the transaction is not completed by August 29, the termination fee will be $3.5 billion, which will increase to $4.5 billion after September 15.
"Alibaba injects $845 million into its Southeast Asian subsidiary Lazada."
"IDC: Baidu's Wenxin large model 3.5 achieves a perfect score in 7 out of 12 indicators."
"Li Xiang: Ideal Auto will not enter overseas markets before 2025 and will adhere to a direct sales model."
"Nasdaq abandons plans to launch cryptocurrency custody services in the United States."
Due to changes in the regulatory environment (under the Biden administration), Nasdaq is no longer pursuing a (custody) license application. The exchange operator will still adhere to its commitment to build a digital asset ecosystem.
Macro and Strategy
"Why did Hong Kong stocks surge fiercely in the afternoon yesterday? Obvious driving force from the liquidity side."
On Wednesday, the ETF turnover in the Hong Kong market reached HK$33.6 billion, and the southbound turnover of ETFs reached HK$14.4 billion, both reaching new highs. On that day, the net inflow of southbound funds was nearly HK$16.5 billion, reaching a new high for the year, showing a positive outlook for southbound funds in Hong Kong stocks.
"The frenzy is back! Technology stocks lead the rise in risk assets, and retail investors return in force."
The bear market in US stocks in 2022 is long gone, and the market has returned to the frenzy of 2021. There are two main signals: 1) the soaring technology stocks; 2) the return of retail investors. Everything is repeating the pattern of 2021, but what followed at that time was a brutal crash.
"Morgan Stanley's chief continues to be bearish: Anti-inflation will turn into deflation, corporate profits and the stock market will suffer a severe blow."
Anti-inflation is about to turn into deflation, which is the main obstacle to corporate profits and will subsequently affect stock prices. The full impact of interest rate hikes is expected to take about 12 months to manifest in the real economy. The result may not only be anti-inflation, but also complete deflation. Deflation will deprive companies of pricing power, which is a slide for profit growth and stock valuation, which is already quite high at the moment."
Temasek plans to invest $10 billion in India within three years and is seeking strategic partners
Temasek plans to invest $3 billion to $5 billion in India annually, or deploy more capital through partnerships and public listings.
Continuously optimize the development environment for the private economy; increase policy support for the private economy; strengthen the legal protection of the development of the private economy; focus on promoting high-quality development of the private economy; promote the healthy growth of private entrepreneurs; continuously create a social atmosphere that cares about and promotes the development and growth of the private economy.
China's Ministry of Finance: Tax exemption policy for new energy vehicle purchases extended for 4 years
It will be extended until December 31, 2027, and during the period from January 1, 2024, to December 31, 2025, new energy vehicles purchased will be exempt from vehicle purchase tax, with a maximum tax exemption of 30,000 yuan per vehicle; from January 1, 2026, to December 31, 2027, new energy vehicles purchased will be subject to a 50% reduction in vehicle purchase tax, with a maximum tax reduction of 15,000 yuan per vehicle."