Dow Down 9.2%, US Stocks Hit 20-Year Record Drop

Last night, the U.S. stock market experienced significant fluctuations, with the three major stock indices closing with mixed results, failing to continue the strong performance from last Friday.

Up until last Thursday, the Dow Jones Industrial Average in the United States had fallen for six consecutive trading days. Finally, on last Friday, the Dow Jones Industrial Average rebounded strongly, rising by 1.5%, which also allowed many investors to breathe a sigh of relief. However, it now appears that it was merely a temporary respite.

The most critical reason is the issues that the U.S. economy is currently facing, which we can also discern some signs from last night's stock market performance.

On the other hand, the currently strong U.S. dollar may be nearing its end.

01, Market Performance

After the U.S. stock market opened last night, it quickly fell, with the Dow Jones Industrial Average reaching a low of 31,928 points. However, after 11 p.m. Beijing time, the index staged a rebound, rising by nearly 600 points. But by the time of closing, it began to fall again, and the Dow Jones Industrial Average only rose by 26 index points, a gain of 0.08%, barely holding on to a positive close.

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The S&P 500 index ultimately fell by 0.39%, and the performance of the Nasdaq index was relatively poor, with almost consistent intraday trends, but it ended up falling by 1.2%.

So far, the Nasdaq index has fallen by 25.5% year-to-date, while both the Dow Jones index and the S&P 500 index have seen declines exceeding 10%.

WTI crude oil posted three consecutive days of gains, closing above $110 last night.

The international gold price fell to $1,785 during yesterday's trading, but rebounded to $1,822 by the time of closing.Mixed Movements

For the recent two trading days of the U.S. stock market, it can only be described as not continuing to fall sharply, not a rebound, and it is even too early to say that it has stabilized.

Looking at the weekly chart, the Dow Jones Industrial Average has fallen for seven consecutive weeks. Seven weeks ago, the Dow closed at 34,861 points, and by last week's close, it had dropped to 32,196, with a cumulative decline of 9.2% over seven weeks. The year-to-date decline is 11.3%, with the vast majority of the drop occurring in just these seven weeks.

This is the worst performance since 2001 when the United States was experiencing the bursting of the internet bubble and the subsequent 9/11 events. Even during the subprime crisis in 2008, the Dow Jones Industrial Average did not have such a long consecutive weekly decline, marking the worst record for the Dow in 20 years.

Last night, Tesla fell by 5.9%, and Twitter fell by 8.2%. Musk claimed that he is considering offering a lower price for the acquisition of Twitter, indicating that there is still much to unfold regarding the acquisition.

In contrast, while the Nasdaq index fell by 1.2%, the Nasdaq Golden Dragon Index, representing Chinese概念股, only fell by 0.19%, showing that Chinese概念股 have a certain level of resilience.

03, The Dollar is Not Looking Good

Although the current performance of the U.S. dollar is very strong, it may be nearing its end.

The appreciation of any country's currency is based on the strong foundation of that country's economy. Over the past year and a half, the U.S. economy has rebounded very well after the pandemic, which has been a necessary condition for the continuous rise.

However, in the coming period, even if the U.S. continues to raise interest rates, the dollar is still very likely to weaken.Goldman Sachs believes that if other Western countries or emerging markets perform well economically in the coming period, it will attract capital flows to other currencies and markets, leading to the sale of the US dollar and causing its depreciation. Should the global economy enter a recession together, the US dollar would also struggle to stand out. In such a scenario, the currencies of some low-interest-rate countries are more likely to be favored, including the Japanese yen, which has not performed well recently but could potentially rise by about 20% in the future.

Regardless of which of the above scenarios occurs, once the US Dollar Index turns downward, capital outflows will inevitably follow, and the US stock market will decline due to continuous capital outflows.