US stocks closed down, the Nasdaq fell more than 120 points into the callback area

Release time：Jun 05, 2019 From：admin

US stocks generally closed down on Monday. The increase in government regulatory risk caused the technology stocks to fall, dragging the Nasdaq to fall more than 120 points and falling into the callback area. A number of investment banks cut their US economic expectations. Investors are weighing the possibility of a Fed rate cut, and the St. Louis Fed governor said the Fed may soon be forced to cut interest rates.

At 16:00 on June 3rd (04:00 on June 4th, Beijing time), the Dow rose 4.74 points, or 0.02%, to 24,819.78 points; the S&P 500 index fell 7.61 points, or 0.28%, to 2742.45. Point; the Nasdaq fell 120.13 points, or 1.61%, to 7333.02 points.

US 10-year bond yields fell below 2.07%, the lowest since September 2017.

Technology stocks generally fell as the US government increased its influence on the supervision of technology companies. The Nasdaq fell more than 120 points, more than 10% lower than its April peak, and entered the callback area.

According to media reports, US antitrust regulators are stepping up their supervision of technology giants. Affected by this, large technology companies suffered heavy losses, Alphabet (GOOGL) fell 6.1%, Amazon (1692.69, -82.38, -4.64%) (AMZN) closed down 4.6%, Facebook (164.15, -13.32, -7.51%) (FB) closed down 7.5%, while Apple (173.3, -1.77, -1.01%) (AAPL) closed down 1%.

Jeff Kilburg, CEO of KKM Financial, said: "Never all the problems that are happening in the technology industry can be traced back to Sen. Elizabeth Warren's threatening remarks about splitting technology giants. We used to think That's just a verbal threat. But from the current news, this really has a lot of influence."

Several Fed officials mentioned the prospects of the Fed’s interest rate cut in his speech on Monday. San Francisco Federal Reserve Bank President Daley said on Monday that her position on interest rates is patience until the US economic growth prospects become clearer. Daley said that if inflation does not show signs of recovery, the Fed will consider cutting interest rates.

She said: "If economic growth falls sharply, or inflation does not seem to reach and maintain above 2%, then we should discuss the issue of lowering the interest rate."

St. Louis Fed President James Bullard said on Monday that he expects the Fed to be forced to take interest rate cuts soon, given the low inflation in the United States.

The US economic outlook has received much attention. Large banks such as JP Morgan Chase, Morgan Stanley, Goldman Sachs and Citigroup have successively lowered US growth expectations.

JP Morgan Chase analysts Matthew Jozoff and Alex Roever warned: "Business confidence may be devastatingly damaging. Economic growth concerns are unlikely to dissipate in the short term and may actually increase further." For the US Treasury bond yield forecast, the warning said that US economic growth will be hindered, and it is expected that the Fed will eventually be forced to cut interest rates.

The agency lowered its forecast for US 10-year bond yields, with a yield forecast of 1.75% at the end of the year, compared with a previous forecast of 2.45%; and a yield forecast of 1.65% in March next year.

JP Morgan Chase’s analyst team also lowered its forecast for US 2-year bond yields, with a forecast of 1.4% at the end of the year and a 1.3% forecast for March next year.

JP Morgan Chase also expects that the Fed will cut interest rates twice this year due to related factors. Some other investment banks also believe that the Fed will cut interest rates. Goldman Sachs said the possibility of a Fed rate cut has increased, while the Dutch cooperative bank expects the Fed to cut interest rates five times before the end of 2020.

Goldman Sachs analysts cut the US economic growth forecast for the second quarter. Analysts also said they believe the possibility of a Fed rate cut is rising, but it is not enough to make a rate cut as a basic estimate. Goldman Sachs expects an economic growth rate of 1.1% in the second quarter, which was expected to be 1.3% a week earlier.

Goldman Sachs analysts said in the research report: "We have revised inflation and economic growth expectations and adjusted our expectations for the possibility of Fed interest rate action."

“As we consider the downside risks to economic growth, we have substantially increased the subjective probability of the Fed’s interest rate cuts,” said the bank. “But the expected results are evenly matched, and the change in interest rate outlook is not enough to make interest rate cuts our benchmark scenario.”

The analyst team led by Goldman Sachs chief economist Jan Hatzius believes that the possibility of a Fed rate cut is rising, but not enough to include it in its benchmark.

Goldman Sachs analysts said: "We have revised inflation and growth forecasts and adjusted the possibility of the Fed cutting interest rates. As economic growth faces downside risks, we have substantially increased the subjective possibility of the Fed to cut interest rates. However, although this is a life-and-death decision , but the outlook has not changed enough enough to make interest rate cuts our benchmark forecast."

Chetan Ahya, chief economist and head of global economics at Morgan Stanley, said in a report released on Sunday that the global economy could start to decline in nine months. He said economic growth will be affected as costs rise, customer demand slows and companies cut capital spending.

Citigroup analysts advise investors to buy US Treasury bonds. They pointed out that the global economy showed a similar situation to the current situation in early 2016, after which the global economy slowed down significantly.

Economic data, the US Department of Labor released data on Monday showed that the US ISM manufacturing index in May was 52.1, a new low since October 2016, with an expected 53. The previous value was 52.8.

The US Commerce Department reported that US construction spending in April was $13 trillion, which was basically the same as the March data. This data means that despite the decline in mortgage rates, the real estate market has barely improved.

In European news, US President Trump arrived in the UK for a state visit. Trump expressed support for Brexit, which does not affect the stability of the global economy. On the eve of his visit to the UK, Trump couldn’t wait to say to the UK: “No agreement to leave the EU! You can sign an agreement with the United States!”

Italian President Conte said at a news conference on Monday that he would resign if the two parties in the ruling coalition did not cooperate. Prior to this, the European market was hit by the “return” between Italy and the EU due to budgetary issues.

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