The U.S. stock market continues to witness a "big shift" in the market, as investors accelerate their exit from large technology stocks. The "Trump trade" has raised concerns about inflation and pushed up the yield on U.S. long-term bonds, putting pressure on the dollar, and most commodity prices have fallen.
During the week of July 15th to July 19th, the US stock market saw a major shift due to the effects of the "rate cut trading" and "Trump trading". Investors accelerated their departure from large-cap technology stocks, and small-cap stocks became the focus of attention.
This week, the S&P 500 and Nasdaq fell by about 2% and 3.7%, respectively, with the worst weekly performance in three months. The Nasdaq ended its six-week rally, with chip stocks becoming the "disaster area" and falling by nearly 9% throughout the week. In contrast, the Dow and the small-cap stock index Russell 2000 increased by 0.7% and 1.7% respectively. Some market analysts believe that, against the background of expected rate cuts and gradually recovering profits, small-cap stocks are expected to continue to be boosted.
In terms of commodities, due to concerns about a renewed inflation caused by "Trump trading", long-term US bond yields were under pressure and pushed up the US dollar. In addition, with the hope of a ceasefire agreement between Israel and Palestine, oil prices fell more than 2.5% throughout the week, with US oil falling below $80, hitting a one-month low.
Copper fell 5.7% throughout the week, the worst since 2022. The rise of the US dollar and US bond yields put pressure on precious metal prices, and gold failed to rise for four consecutive weeks.
The US dollar rose for the first time in three weeks, with non-US currencies falling overall. The euro fell 0.23% against the US dollar this week, while the British pound fell 0.57%. However, the yen against the US dollar hit a six-week high during the week. According to daily operation data released by the Bank of Japan, the Japanese government may have intervened last week with a total amount of nearly 6 trillion yen.
US bond yields rose across the board this week, with the 2-year and 10-year US bond yields rising by about 6 basis points this week.
The chip sector led the decline of the US stock market this week, and the regional bank index continued to rise for several trading days, reaching the highest level in over a year.