On October 5, local time, the US unemployment data showed that the labor market is still resilient; The Dow was down 0.03 percent, the S&P 500 down 0.13 percent and the Nasdaq down 0.12 percent.
In fact, in the past few weeks, a sharp sell-off in U.S. Treasury bonds has triggered a sharp volatility in U.S. stocks, and the Dow has now completely erased its gains for the year.
On Friday, the US non-farm payrolls data for September will be released, and the consensus is for 170,000 new jobs, weaker than the previous estimate of 187,000. Non-farm payrolls and next week's inflation data will determine the Fed's November monetary policy and whether the 10-year Treasury yield, the anchor of global asset pricing, rises to the 5 per cent mark or falls to 4.5 per cent. The current Wall Street consensus is that a stronger-than-expected rise in payrolls on Friday could intensify the bond market sell-off and dollar strength and even force the Fed to reconsider its balance-sheet reduction policy.
In terms of individual stocks, with Apple's share price falling from a record high, CEO Tim Cook sold about $41 million worth of Apple shares after taxes, his largest sale in more than two years, drawing intense attention from the market.
Warren Buffett's Berkshire Hathaway sold about 3.07 million more HP shares in the past few days for about $80.4 million, according to a filing with the Securities and Exchange Commission on Thursday. After the sale, Berkshire's stake in HP fell below 10%.
Major U.S. stock indexes closed slightly lower
The three major U.S. indexes closed down slightly, with the Dow down 0.03 percent at 33,119.57, the S&P 500 down 0.13 percent at 4,258.19 and the Nasdaq down 0.12 percent at 13,219.83.
In terms of individual stocks, Coca-Cola fell 4.83% and Dow fell 2.43%, leading the Dow lower. Tech stocks were mostly down, with Apple up 0.72%, Amazon down 0.82%, Netflix down 1.14%, Google down 0.13%, Facebook down 0.26%, Microsoft up 0.13%, Nvidia up 1.47% and Tesla down 0.45%. Rivian, a new energy vehicle, fell 22.88%, its worst daily performance since its U.S. IPO.
China concept stocks were mixed, with Jinsheng Amusement up 7.67 percent and Yigatong Technology down 11.76 percent. The Nasdaq Gold Dragon China Index, which fell more than 1 percent in early trading, closed down nearly 0.3 percent, falling for a fourth straight day and hitting its lowest level since July 6.
Buffett sells HP shares again, shedding 3.07 million shares
Warren Buffett's Berkshire Hathaway sold about 3.07 million more HP shares in the past few days for about $80.4 million, according to a filing with the Securities and Exchange Commission on Thursday.
As a result of the sale, Berkshire's stake in HP fell below 10%, meaning it would no longer have to file with the SEC if it continued to reduce its stake. After the sale, Berkshire still owns about 97.9 million HP shares, worth about $2.57 billion based on Thursday's closing price.
Last April, Berkshire unexpectedly disclosed a $4.2 billion stake in HP, sending the company's shares up 14.8 percent to $40.06 the next day. Berkshire owned about 120 million HP shares before it began selling shares in September.
In mid-September, Berkshire sold about 5.5 million HP shares for the first time, cashing out about $160 million. Wall Street analysts have estimated that Berkshire may have suffered some loss on the sale, given the price at which it bought HP in early 2022.
The latest SEC filing doesn't say why Berkshire sold HP. But outside analysts speculate that the weak PC market and H-P's low stock price may be the main reasons. At the same time, HP's performance is not satisfactory. According to its latest financial results, in the fiscal third quarter ended July 31, HP according to the United States general accounting principles (GAAP) calculation of total revenue of $13.2 billion, down 9.9%, below the market expectation of $13.4 billion; Non-GAAP net income was $800 million, down 32% year over year.
Cook sold 510,000 shares of Apple stock for $40 million
The latest disclosure documents from the US Securities and Exchange Commission (SEC) show that Apple CEO Tim Cook recently sold about $41 million worth of Apple shares after taxes, which is Cook's largest sell-off in more than two years.
According to the SEC filing, Cook sold 511,000 Apple shares at $171 to $173 per share and still holds about 3.28 million shares after the sale, giving him a market value of about $570 million.
It was Cook's biggest sell-off in more than two years. The last time was in August 2021, when Cook sold about 4.6 million Apple shares worth more than $750 million.
Analysts say that's when Apple's stock price is near an all-time high and Apple executives are selling the company's stock. O 'Brien, a senior executive vice president, and Adams followed Cook's lead in selling about $11.3 million worth of stock.
At the same time, Cook cut this year's compensation by about 40 percent to $49 million and increased performance-related stock awards to 75 percent from 50 percent previously.
Apple's valuation tops out
Apple is up more than 30% this year, making it one of the leading U.S. tech stocks. Apple shares rose 0.72% to close at $174.91 a share on Thursday, giving the company a total market value of $2.73 trillion.
However, the company's shares have been falling recently as investors worry about a slower-than-expected recovery in demand for smartphones. After hitting an all-time high of $197.962 in July, Apple shares began to slide, down about 12 percent from their peak.
According to a report by research firm Canalys, smartphone shipments in North America are expected to decline by 12 percent in 2023. Nispel expects Apple's fourth-quarter U.S. sales to decline year-over-year for the fourth straight year and continue to be weak in the first quarter.
Kerbank Capital Markets downgraded Apple's stock to "sector perform" from "overweight." The company noted that Apple's stock valuation is near an all-time high, but growth in iPhone sales is likely to slow amid slowing consumer spending.
Analyst Brandon Nispell wrote in a note that the iPhone upgrade cycle is challenging amid slowing consumer spending and that "U.S. sales could struggle." In addition, "Expectations of further accelerated growth in international markets may be too aggressive."
The unemployment data did not extend Wednesday's "small non-farm" employment cooling signal
In terms of macroeconomic data, US initial jobless claims for the week ending September 30 were 207,000, compared to 210,000 expected, compared to 204,000 previously; Continuing claims came in at 1.664 million versus 1.675 million versus 1.67 million. The four-week average of claims was 208,750 from 211,000.
After a much weaker-than-expected rise in private ADP employment on Wednesday, data the following day failed to reinforce the cooling in employment. Initial jobless claims remained near historic lows last week, a sign of labor market resilience.
In addition, the trade data released at the same time showed that the United States trade account deficit of 58.3 billion US dollars in August, the lowest since 2020, the expected deficit of 62.3 billion US dollars, the previous deficit of 65 billion US dollars; Exports were $256.03 billion, up from $251.7 billion; Imports were $314.33 billion, up from $316.7 billion. The smallest deficit in nearly three years meant a pullback in U.S. demand for foreign goods and an increase in exports of goods from abroad.
After the release of the above two sets of data, the yield of each maturity of the US Treasury bond rose slightly during the day, at one point hitting a intra-day high of 4.773 percent. The yield curve inversion between the 2-year and 10-year Treasury notes narrowed to 29 basis points, the smallest inversion since March.
Fed Daly suddenly "doves" the tightening of the US bond market is equivalent to a rate hike
On Thursday, San Francisco Fed President Mary Daly said policy makers could keep interest rates at current levels if the labor market and inflation continue to cool or if financial conditions remain tight.
"If we continue to see cooling in the Labour market and inflation moving back towards our objective, we can keep rates on hold and let the effects of policy continue to work," Mr Daley said at an event organised by the Economic Club of New York.
"Even if we keep interest rates at the current level, policy is actually going to become more restrictive and inflation and inflation expectations will continue to fall as a result," she said. She added that "holding interest rates steady is therefore also a positive policy action."
Mr. Daley added, "If financial conditions, which have tightened dramatically over the past 90 days, are similarly tight, we will have less need to take further action." Interest rates on US government bonds have risen markedly in recent days, with the yield on the 30-year bond briefly rising above 4.85% this week, its highest level since 2007.
Mr Daly believes the tightening bond market is already the equivalent of a rate rise, "so there is no need for further tightening". And in her view, the bond market tightening is not disorderly, but "financial markets are finding their footing and the right price."
Will the surge in long-term Treasury yields destroy hopes of a soft landing?
The sell-off in global bond markets has intensified significantly over the past few sessions and pushed yields in some major developed economies to their highest levels in at least a decade. On October 4, Beijing time, the 10-year US bond yield, known as the "anchor of global asset pricing", approached 4.9%, and the 30-year US bond yield broke 5%, both of which hit a new high since 2007. So far, the two are still in a high and volatile situation.
Nick Timiraos, a financial journalist who is regarded as the "mouthpiece of the Federal Reserve" and known as the "new Fed news agency", wrote recently that the sudden and sharp sell-off of long-bond yields in the United States is destroying hopes of a soft landing for the economy, and the surge in borrowing costs could significantly slow economic growth and increase the risk of financial market crashes. That, in turn, could weaken the case for the Fed to raise rates again this year.
The recent surge in US long-bond yields lacks an obvious "culprit," with the most likely reason being a combination of improved expectations for US economic growth and concerns about the federal government's huge deficit. That's a different logic from last year's rise in long-dated yields, when expectations of Fed tightening pushed short-dated yields higher and investors worried about inflation demanded higher compensation for holding long-dated bonds.
The article warned that the rise in borrowing costs, which is already rippling through the U.S. stock market, mortgage rates and the dollar, "could put pressure on stock and other asset prices, leading to weak investment, hiring and economic activity."
Goldman Sachs economists estimate that if the tightening of financial conditions that began in late July continues, it could shave 1 percentage point off U.S. GDP growth over the next year. Analysts at Barclays say global bonds are destined to keep falling unless a sustained stock market rout makes fixed income assets attractive again.
In addition, PIMCO co-founder and "old bond king" Bill Gross has warned again in a recent report that he no longer believes bonds are an attractive investment and stocks are even worse. In any case, he does not recommend long-term investments at current levels. Gross noted that the rise in Treasury yields means stocks now look overvalued in terms of their expected earnings.