​4 August 2022

The three major U.S. stock indexes closed up in shock last night. As of the close, the Dow rose 1.26%, the Nasdaq rose 2.59%, and the S&P rose 1.53%. The yield on the 10-year U.S. Treasury bond fell 1.26% to close at 2.706, a difference of about -23 basis points compared with the yield on the two-year Treasury bond. The fear index VIX closed down 5.74%. Brent crude closed down 3.51%. Spot gold closed up 0.25% at $1,765.37 an ounce. The dollar index remained high, closing at 106.37.

The US ISM non-manufacturing PMI recorded 56.7 in July, significantly exceeding the expected 53.5 and the previous value of 55.3. Institutional analysis said that the US service industry unexpectedly rebounded in July, mainly due to strong growth in orders, while supply bottlenecks and price pressures eased. The unexpected rebound came after the Institute for Supply Management's manufacturing survey released on Monday showed a modest slowdown in factory activity last month. This also means that overall economic growth momentum has cooled, but service sector activity is being supported by a shift from spending on goods to spending on services. The three major stock indexes opened higher.

U.S. economic conditions deteriorated markedly in July, with business activity falling in both manufacturing and services. Excluding months of lockdowns in response to the coronavirus pandemic, overall output fell by the most since the global financial crisis, suggesting the economy is likely to contract for a third straight quarter. Therefore, the Fed's Bullard said that he hopes to raise interest rates to 3.75%-4% this year. The yield of the US 2-year and 10-year Treasury bonds is inverted by 36 basis points, which is a new high since 2000. The overnight index related to the Fed has dropped. Futures show a 50% chance that the Fed will raise rates by 75 basis points in September.

In terms of the political situation, Taiwanese media quoted Taiwan's defense department as saying on the evening of the 3rd that a total of 27 sorties of the People's Liberation Army military aircraft entered the "Taiwan Air Defense Identification Zone" and crossed the so-called "strait center line". U.S. House of Representatives Speaker Nancy Pelosi left Taiwan, China by plane at around 17:53 Beijing time on August 3. The U.S. Senate has enough votes to approve Finland and Sweden to join NATO, and the vote is still in progress. The three major stock indexes closed higher.

Apple rose 3,82%, this time in a break from the norm by delaying the release of updated software for the iPad by a month.

Microsoft rose 2.85%, and both Microsoft and Sony game revenue declined.

Google rose 2.78% as U.S. antitrust enforcement agencies are investigating the Google Play Store.

Tesla rose 2.27% after Citigroup maintained a sell rating on Tesla (TSLA.O), raising its price target to $424 from $375.

Meta rose 5.37% as Meta will hold an investor meeting to discuss its first bond sale.

Sources from: Investing.com; Reuters.com

Louis Yap

Join me for more Stock Information
Telegram
https://t.me/wealtharchitect2u