"US Stocks Bizarre Trend: Titans Plunge $310B"

1. Odd U.S. Stock Market

Last night, the U.S. stock market may have experienced another fake rally.

The three major U.S. stock indices rose in unison last night, with the Dow Jones Industrial Average, which had the smallest increase, up by 1.34%. The Nasdaq Composite once again took the lead, surging by 2.76%, and the S&P 500 index has firmly held above 4,000 points, closing at 4,088 points, up 2%.

However, even with these gains, it is hard to feel reassured, as Federal Reserve Chairman Powell's speech still leans towards a hawkish stance. Under normal circumstances, this would undermine market confidence, but the U.S. stock market rose instead, which is quite peculiar.

Nevertheless, such strange behavior has occurred twice recently in the U.S. stock market.

The first time was when the U.S. announced a 1.8% decline in Q1 GDP; the stock market rose at the time, but fell on the next trading day. The second time was in May when the Federal Reserve raised interest rates by 50 basis points; the stock market surged after the announcement, but similarly plummeted大幅度 on the following trading day.

So, although the U.S. stock market rose last night, the decline in response to Federal Reserve Chairman Powell's speech may only appear in the next few trading days.

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2. The Federal Reserve's Hawkish Stance

Last night, Federal Reserve Chairman Powell stated in his speech that under the current circumstances, interest rates should continue to rise, and there is already ample support to raise rates by 50 basis points at each of the next two meetings. According to the planned schedule, the next two meetings will be held in June and July, which means that by the end of July, the interest rate level will increase by another 100 basis points compared to the current level.

Powell's speech is essentially an attempt to convey more certain information to the market to prevent excessive speculation and unrest caused by market volatility.Regarding the current U.S. economy, Powell believes that the economy is highly uncertain at present, but potential growth is still expected. The current economic conditions can withstand a tightening of monetary policy. Even though the current unemployment rate has risen slightly, the overall performance of the job market remains quite good. For many industries and businesses, there is still a risk of labor shortages, which is also a good sign.

On the issue of inflation, Powell emphasized that the conflict between Russia and Ukraine has led to an increase in commodity prices, which in turn has affected the U.S. inflation data. It is not clear how long the impact will last, but it is certain to be more prolonged than previously expected.

However, the speech obviously overlooked the fact that there are other factors affecting the rise in prices besides the conflict. The previously loose monetary policy, which led to an excess of market liquidity, is a major factor, and the current labor shortage leading to increased income is also one of the factors driving up prices.

3. Problems faced by U.S. companies

Last night, most of the large-cap technology stocks in the United States rose, with Tesla up 5%, Qualcomm and Amazon up 4%, and Apple, Google, Microsoft, and others all rising.

The rise in the semiconductor sector echoes the rise in the semiconductor sector of A-shares in recent days.

Financially, Citibank's stock price rose by 7.56%, which may be related to Buffett's stock-building activities.

What was surprising was the significant decline in Walmart, with a daily drop of more than 11%, and an overnight loss of 310 billion yuan in market value. This should come from Walmart's latest financial report.

Walmart's revenue grew slightly, but the profit performance was not good. The net profit for the first quarter of this year decreased by 25% year-on-year, a drop of 1/4, which is a very large margin.

The increase in revenue indicates that sales recovery is still acceptable under the influence of the pandemic, but the significant decrease in profit mainly comes from the rise in costs under the influence of inflation.Walmart is currently facing the same issue that most American companies are facing. Even if they can achieve growth in sales, it cannot offset the significant increase in costs, leading to compressed corporate profits and even losses in some industries. This is the biggest challenge that the American economy will face in the future.

Last night, while the Nasdaq Index rose, the Nasdaq Golden Dragon China Index, which represents Chinese concept stocks, also rose by 5%.

Alibaba and Pinduoduo's gains exceeded 6%, and JD.com and Baidu's gains also reached 4%.