Local time on August 13th (Tuesday), ahead of the key CPI data release on Wednesday, the U.S. stock market further stabilized. The previously released U.S. PPI data came in weaker than expected, reinforcing the view that inflation is cooling down.

As of the close on that day, the Dow Jones Industrial Average rose by 408.63 points from the previous trading day, closing at 39,765.64 points, a gain of 1.04%; the S&P 500 stock index increased by 90.04 points, closing at 5,434.43 points, a gain of 1.68%; the Nasdaq Composite Index gained 407.00 points, closing at 17,187.61 points, a gain of 2.43%.

In terms of individual stocks, NVIDIA closed up 6.53%, with its market value increasing by a cumulative $42.3858 billion over the past four trading days. This rebound also propelled the overall stock market upward, with NVIDIA contributing about 22% of the S&P 500 index's rise over these four days.

Ivana Drevska, founder and chief investment officer of Spear Invest, said: "NVIDIA brought a lot of good news in this earnings season, but the impact of the carry trade was too great, and the good news simply didn't matter. Now that the technical pressure has eased and the market has returned to fundamentals, this is the reason for the stock price surge."

Advertisement

NVIDIA's stock rebound also caught option traders who were betting on further declines off guard. Institutional data shows that the cost of protecting against a 10% drop in the stock over the next 60 days is close to the highest level since May 2023, compared to contracts that profit from a 10% rise.

Starbucks' stock rose by 24.50%, marking the largest one-day gain in its history, following the announcement of Brian Niccol as Chairman and CEO.

Niccol will officially take up his position on September 9, 2024. Prior to this, Starbucks' Chief Financial Officer, Rachel Ruggeri, will serve as the interim CEO, and Starbucks' Board Chair, Mellody Hobson, will become the lead independent director.

B. Riley Financial announced a significant loss in the second quarter, primarily attributed to a substantial write-down of its investment in Franchise Group. Affected by this news, B. Riley Financial's stock price fell by 11.41% on Tuesday.

Due to increasing competitive pressures, rising labor costs, and industry capacity constraints, JetBlue Airways faced credit rating downgrades from Moody's, S&P Global Ratings, and Fitch Ratings, and its stock price fell by 4.79% on Tuesday.

Home Depot initially fell by 1.8% but ended up closing with a gain of 1.23%. The company's second-quarter earnings report released on Tuesday showed that both its profits and revenues exceeded expectations. On the other hand, due to weakening consumer demand for home improvement projects, Home Depot lowered its full-year profit and same-store sales forecasts. Home Depot now expects comparable sales to decline by 3% to 4%, compared to the previous forecast of a decline of about 1%.After a recent sharp adjustment, the US stock market has gradually stabilized, which is closely related to the retreat of the VIX fear index and the improvement of economic data. However, there is still disagreement among institutions and investors in the market about whether this turbulence has ended.

Some institutions believe that the current macro environment is still conducive to a soft landing for the US economy, rather than falling into a recession. Historical data shows that the unemployment rate in the United States remains relatively low, indicating the resilience of the labor market, and the economy as a whole has not shown obvious structural imbalances. More importantly, the Federal Reserve currently has sufficient monetary policy space and can stimulate economic growth through rapid interest rate cuts.

At the same time, the inflation level is gradually approaching the 2% target set by the Federal Reserve, which provides greater stability for the economy. In addition, capital investment in the field of artificial intelligence continues, driving profit growth in related industries. In fact, in this earnings season, it is expected that the earnings growth rate of US companies will reach 10%-12%, which is the fastest growth rate since the first quarter of 2022.

Skeptics, on the other hand, argue that artificial intelligence, as an important factor driving market sentiment and company stock prices, although it has attracted a lot of capital and attention, its long-term impact and actual returns are still uncertain. In addition, as the US presidential election approaches, political uncertainty intensifies, and market concerns about future policy directions are also increasing.

Todd Walsh, CEO and Chief Technical Analyst of Alpha Cubed Investments, said that the trend of the stock market in the past week was a "perfect storm of normalization," which reminds investors that the US economy will inevitably slow down. Walsh said, "Investors have been focusing only on technology stocks and artificial intelligence, which is a short-sighted behavior."

Max Wasserman, co-founder and senior portfolio manager of Miramar Capital, said, "Investors should take a step back to ensure that they are not led by the daily fluctuations of the stock market."

On the 13th, the US Department of Labor released data showing that, after adjustment, the US Producer Price Index (PPI) in July 2024 rose by 0.1% month-on-month compared to the data in June, and rose by 2.2% year-on-year compared to the same period last year. The increase in PPI in July was lower than expected, showing a continuous easing of inflationary pressures.

Excluding the more volatile food and energy categories, the core PPI in July remained unchanged from the previous month, with a year-on-year increase of 2.4%, lower than the expected 2.6% and the previous value of 3%. The flat month-on-month data is the most moderate increase in four months, and it is better than the market's expected 0.2%, and the previous value was also revised down from 0.4% to 0.3%.

Atlanta Fed Chairman Bostic said on Tuesday that the current situation is at an inflection point where inflation is close to the target. He hopes to see "a little more data" before supporting a rate cut, and emphasized that he wants to ensure that the Federal Reserve does not have to change course after starting to ease.

"The current situation is at an inflection point where inflation is close to the target," Bostic said in a speech at the Atlanta African American Financial Professionals Conference on Tuesday. He reiterated his position since March, that he "may be ready to cut interest rates before the end of this year."The inflation data set to be released on Wednesday is considered the focal point of market attention this week. The market generally expects the CPI to drop from 3% to 2.9%, and the core CPI to decrease from 3.3% to 3.2%. With the easing of inflationary pressures, coupled with the weak employment data in July, economists anticipate that the Federal Reserve may begin a series of rate cuts starting next month. This week's release of retail sales data, earnings reports from major retailers, and the consumer confidence index are also believed to provide a basis for the market to gauge the future direction of monetary policy.

In the commodity market, as investor concerns over escalating tensions in the Middle East subside, international oil prices fell on Tuesday. The September delivery West Texas Intermediate (WTI) crude oil futures on the New York Mercantile Exchange closed down $1.71, a drop of more than 2.13%, at $78.35 per barrel; the October delivery Brent crude oil futures on the Intercontinental Exchange in Europe closed down $1.61, a drop of more than 1.95%, at $80.69 per barrel.