Last night, two big bad news raided US stocks.
Overnight, the latest disclosureCatscrasharenaturbostarsdownloadTwo pieces of data raised concerns in the market. One is that the initial value of Markit comprehensive PMI in the United States in May was 54.Catscrasharenaturbostarsdownload.4, a 25-month high, much higher than expectedCatscrasharenaturbostarsdownload51%CatscrasharenaturbostarsdownloadSecond, initial jobless claims fell by 8000 to 215000 in the week ended May 18, the biggest drop since September 2023.
The release of the two data raised concerns about rising inflation in the US, and the timing of the Fed's rate cut could be further delayed, with traders postponing the Fed's forecast for its first rate cut from November to December. Affected by this, US stocks plunged collectively, with the Dow down more than 669 points. By the close, the Dow was down 1.53%, the Nasdaq was down 0.39%, and the S & P 500 was down 0.74%.
It is worth noting that the latest speech by David Solomon, CEO of Goldman Sachs, has aroused a great deal of attention and heated discussion on Wall Street. He said the Fed is not expected to cut interest rates this year because US government spending proves that the country's economy is more resilient. Another super-heavyweight, JPMorgan Chase CEO Jamie Dimon, also warned that the US economy could have a "hard landing" and that interest rates could still rise "slightly".
Us stocks were suddenly hit by air strikes
Us stocks opened overnight, and after the three major indexes collectively opened high, they suddenly plunged across the board. The largest intraday drop in the Dow was more than 669 points. By the close, the Dow was down 1.53%, down more than 600 points; the Nasdaq was down 0.39%, and the S & P 500 was down 0.74%.
On the news, on the evening of May 23, Beijing time, S & P global data showed that the US Markit manufacturing PMI in May was 50.90, a two-month high, higher than the expected 49.9 and the previous value of 50. the initial PMI of the Markit service industry in May was 54.8, a 12-month high, higher than the expected 51.2, and the previous value was 51.3. In May, the initial value of Markit comprehensive PMI reached a 25-month high of 54.4. it was higher than the expected value of 51.2. the previous value was 51.3.
In terms of inflation data, which are closely watched by the market, factory input prices have risen at the fastest pace since November 2022, and prices paid and received by service providers have also increased. In the composite PMI data, the measure of the price of inputs rose to the second highest level since September last year, while the price measure of fees also rose.
The release of this data has raised concerns about rising inflation in the United States, and the timing of the Fed's rate cut may be further delayed. Traders postponed the Fed's forecast for its first rate cut from November to December.
At the same time, there is also bad news from the US job market.
First-time jobless claims fell 8000 to 215000 in the week ended May 18, the biggest drop since September 2023, according to data released by the Labor Department on the evening of May 23. There was a similar decline the previous week, with a median forecast of 220000.
Excluding seasonal adjustments, the actual number of new jobless claims fell slightly to 192017, falling below 200000 for the eighth time this year. This is a very low level.
The number of people claiming unemployment benefits remained virtually unchanged in the week to May 11, at 1.794 million, slightly higher than expected, with the previous figure revised down to 1.786 million.
The release of the data raised concerns about the continued popularity of the US job market, which means that the US economy is still heating up and there is a risk of further inflation.
In addition, the latest minutes released by the Federal Reserve also sent a signal of heaviness. It shows that Fed officials believe it will take longer than they had expected before they are more confident that inflation will continue to fall to the Fed's target, and that despite the restrictions on monetary policy, many are still uncertain about the extent of the restrictions.
Officials assessed that "net demand and supply in the labour market continue to balance, albeit at a slower pace." But they also pointed out that labour market conditions were "still generally tight".
"A number of Fed officials have mentioned that they are willing to tighten policy further if the inflation risk becomes a reality, and such action is appropriate," the minutes said. " The implication is that once inflation picks up again, the Fed may raise interest rates further.
Nick Timiraos, the new Fed news agency, said Fed officials expected it would take longer to cut interest rates, and some were open to raising rates in the face of accelerating inflation.
A powerful prophecy
It is worth noting that the latest speech by David Solomon, CEO of Goldman Sachs, has aroused a great deal of attention and heated discussion on Wall Street.
He said at an event at Boston College that the Fed is not expected to cut interest rates this year because US government spending proves that the country's economy is more resilient. "I still don't see convincing data suggesting that we are going to cut interest rates here. My current forecast is to cut interest rates zero. "
In addition, Solomon believes that investment in artificial intelligence infrastructure also helps the U. S. economy be more resilient in the face of the Fed's monetary tightening.
Solomon warned in March that US inflation could be more stubborn than the market had expected. His latest forecast for the number of Fed interest rate cuts echoes this view.
However, Solomon also pointed out that consumers are beginning to feel the pressure of rising prices.
Solomon also mentioned geopolitical fragility and said it was a problem that people would face for a long time.
The latest speech reflects his pessimism about the outlook for the US economy and inflation.
At the same time, another Wall Street heavyweight, JPMorgan Chase CEO Jamie Dimon, issued a similar warning. Mr Dimon said US inflation was more serious than the market had expected and could reach 4 per cent next year, but there was nothing anyone could do about it and interest rates could surprise people. "We don't bet on the future, although I don't believe in the central bank's benchmark forecasts at all."
Dimon believes that the US economy may have a "hard landing". The worst outcome of the US economy would be "stagflation", in which inflation continues to rise, but economic growth slows in the face of high unemployment.
Mr Dimon said interest rates could still rise "slightly". "I think inflation is more difficult than people think," he said. I think this is more likely than others think, mainly because the huge fiscal and monetary stimulus still exists and may still be driving this liquidity. "
When asked about the prospects and timing of rate cuts, Dimon said that while market expectations were "quite good,""they are not always right."