Nasdaq Drops With Tech Giants Leading The Decline, Fed Signals Rate Increase

On Wednesday, U.S. stocks closed lower, with tech stocks leading the decline as the Nasdaq dropped by 1.5%.

The Federal Reserve announced that it would keep interest rates unchanged and projected another rate hike by the end of the year. Powell stated that the FOMC remains committed to reducing the inflation rate to 2%.

The Fed released the results of its September monetary policy meeting, deciding to maintain the benchmark interest rate in the range of 5.25% to 5.50%, in line with market expectations.

The FOMC statement indicated that 12 officials anticipate one more rate hike this year, while 7 officials expect rates to remain unchanged. Job growth has slowed in recent months but remains robust.

The Fed officials’ dot plot on rate hikes shows median expectations for the federal funds rate at 5.6% and 5.1% by the end of 2023 and 2024, respectively. The median forecast for 2026 is 2.9%, higher than the long-term expectation of 2.5%.

Nick Timiraos, known as the “Fed’s megaphone,” suggests that the median indicates two rate cuts in 2024. Despite no increase in the estimate of the long-term unemployment rate, the median expectation of Federal Open Market Committee participants is that inflation will return to target levels by 2026, the unemployment rate will remain at long-term levels, and the economy will maintain a trend of nominal federal funds rates slightly below 3%.

U.S. Stocks

Fundamental Analysis:

Major tech stocks led the decline with Google falling over 3%, while Netflix, Microsoft, Nvidia, and others dropped by over 2%.

Amazon, Meta (formerly Facebook), and Tesla fell by over 1%. Chip stocks collectively declined, with Intel and Arm dropping over 4%. Micron Technology, Qualcomm, Broadcom, and AMD fell over 1%.

Online grocery delivery company Instacart plummeted by over 10%, briefly falling below its $30 IPO price. Boston marketing automation platform tech supplier Klaviyo saw a 9% rise on its U.S. IPO debut.

Most popular Chinese concept stocks declined, with the Nasdaq Golden Dragon China Index falling by 0.90%.

XPeng Motors dropped over 6%, while Pinduoduo dropped over 3%.

Netease, iQiyi, and Manbang Group fell over 2%. Vipshop, Tencent Music, Alibaba, Bilibili, and Baidu dropped over 1%. and Weibo had slight declines, while NIO rose by over 3%, and Futu Holdings increased by over 1%. Ideal Auto had a slight gain.

Technical Analysis:   

(S&P 500 Index, 1-day chart)

Market Trends:

  • Dow Jones Industrial Average closed down by 76.85 points, a 0.22% decrease, at 34,440.88 points.
  • Nasdaq Composite Index fell by 209.06 points, a 1.53% decrease, to 13,469.13 points.
  • S&P 500 Index dropped by 41.75 points, a 0.94% decrease, to 4,402.20 points.

Hong Kong Stocks

The morning session saw all three major indices continuing to decline. The Hang Seng Tech Index dropped sharply by 2.16%, while the Hang Seng Index and Hang Seng China Enterprises Index fell by 1.31% and 1.38%, respectively.

Weighted tech stocks faced a broad decline, with Kuaishou falling by over 3% and Meituan dropping nearly 3%. Tencent, Alibaba, Baidu, and Netease all declined by over 2%.

Automobile stocks, Tesla concept stocks, and mobile gaming stocks generally saw declines.

Telecom stocks rose, with all three major telecom operators seeing gains.

Property stocks were generally strong, with China Evergrande up by 10% and Longfor Group and Country Garden following suit.

Transportation stocks, including road, rail, and shipping, showed relatively strong performance.

Technical Analysis:

(Hang Seng Index, 1-day chart)

Market Trends:

  • Hang Seng Index (HSI) fell by 1.31%, closing at 17,651.44 points.
  • Hang Seng Tech Index (HSTECH) dropped by 2.16%, closing at 3,837.10 points.
  • Hang Seng China Enterprises Index (HSCEI) declined by 1.38%, closing at 6,096.59 points.

FTSE China A50 Index

Fundamental Analysis:

In the morning of September 21, A-share indices opened lower, briefly rebounded into positive territory, and then declined again.

The Shanghai Composite Index fell below 3,100 points, the Shenzhen Component Index briefly dropped below the 10,000-point mark, and the ChiNext Index continued to hit new lows for the year.

In terms of industry sectors, shipbuilding, communication equipment, shipping ports, computer equipment, real estate services, and communication services saw slight gains.

Precious metals, jewelry, automobile components, tourism hotels, and beauty care were among the top decliners. Theme-wise, star flash concepts, 6G concepts, and satellite communications were relatively active.

Technical Analysis:

(SSE Composite Index, 1-day chart)

Market Trends:

  • Shanghai Composite Index (SHCOMP) fell by 0.59%, closing at 3,090.31 points.
  • Shenzhen Component Index (SZCOMP) dropped by 0.71%, closing at 10,001.01 points.
  • ChiNext Index (CHINEXT) declined by 0.73%, closing at 1,972.85 points.
  • SSE STAR Market 50 Index (SSE50) fell by 0.38%, closing at 862.77 points.

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