On Friday, the performance of the three major indexes in the US stock market showed differentiation, with the Dow Jones and S&P 500 slightly falling and the Nasdaq slightly rising by 0.12%. The Dow Jones Industrial Average has been negative for 7 consecutive days, falling from above 45000 points to below 44000 points.
Another trillion dollar giant is born
On Friday, Broadcom clearly became the focus of technology stocks in the US, with its market value surpassing $1 trillion for the first time in history after its stock price surged by over 24%. It is also the ninth US listed company with a market value exceeding $1 trillion.
The latest financial report shows that Broadcom's revenue for the fourth quarter of fiscal year 2024 was $14.054 billion, an increase of 51% compared to the same period last year, and its revenue for the fiscal year was $51.6 billion, an increase of 44% year-on-year. It is worth mentioning that the revenue of artificial intelligence for the entire fiscal year increased by 220% year-on-year to 12.2 billion US dollars, driving the revenue of the semiconductor business to a record high of 30.1 billion US dollars.
Investors are also excited about the prospects of Broadcom in the coming years. Hock Tan, CEO of Broadcom, stated during the earnings call that sales of artificial intelligence products will increase by 65% in the first quarter, far faster than the overall semiconductor industry's growth of about 10%. The company also predicts that the demand for custom AI chip ASICs in the market will be between $60 billion and $90 billion by 2027. Moreover, in terms of AI chips, Broadcom has two additional super customers, which are expected to bring in revenue before 2027.
Other technology stocks showed differentiation, with Tesla rising over 4% (setting a new historical high) and ARM rising over 2%; Qualcomm and Apple saw slight increases. On the contrary, AMD, Nvidia, and Intel fell more than 2%; Meta and Google fell more than 1%.
Most Chinese concept stocks fell
For Chinese concept stocks, most of them fell on Friday, with the Nasdaq China Golden Dragon Index falling 1.13%. Xiaopeng Motors and Beike fell more than 3%; Pinduoduo, JD.com, Ctrip, and Ideal Auto fell more than 2%; Alibaba and Huazhu fell more than 1%. Baidu, Zhongtong Express, and Futu Holdings closed higher.
Is a December interest rate cut a certainty?
Although Jones has been experiencing a continuous pullback recently, Nasdaq and the S&P 500 are still overall strong, with Nasdaq breaking through the 20000 point mark at one point and the S&P 500 stabilizing above 6000 points. In the eyes of many market participants, this is closely related to the upcoming December interest rate meeting.
The Federal Reserve will hold its last monetary policy meeting of the year on December 17-18 local time, and will disclose the latest interest rate level at 3am Beijing time next Thursday. According to the Federal Reserve interest rate observer, the probability of the Fed cutting interest rates by 25 basis points in December is as high as 99.6%.
Recently, CITIC Securities also stated that after the impact of hurricanes and strikes dissipated, the new non farm payroll data for November rebounded as scheduled. The unemployment rate has increased and the US job market has moderately weakened, but wage growth remains stable and there have been no significant layoffs by companies. The overall job market remains healthy. After the release of non farm payroll data, the market raised its expectations for the Federal Reserve to cut interest rates. The market's expectation for a "soft landing" of the US economy will continue at least until next year before Trump's inauguration, and the previous judgment that the Federal Reserve's December interest rate meeting will cut interest rates by 25bps will be maintained.
Will interest rate cuts slow down in 2025?
Although there is a high probability that the Federal Reserve will cut interest rates three times in a row, looking ahead to 2025, the market has generally reduced the frequency of Fed interest rate cuts. The minutes of the November monetary policy meeting of the Federal Open Market Committee (FOMC) in the United States mentioned that if the economic performance meets expectations, it may be appropriate to gradually cut interest rates and shift towards a more neutral policy stance.
This is mainly because since September, the rate of decline in US inflation has been slower than expected, and the labor market has not been as weak as people had feared. Many analysts predict that the number of interest rate cuts in 2025 will decrease due to growing concerns about the stickiness of inflation, especially after the committee's rate cuts next week.
Former Cleveland Fed Chairman Mester said, "I think they can safely carry out the 25 basis point rate cut in December, and the market is already prepared for it. However, they must reconsider the pace of next year's rate cuts because it seems that inflation progress is a bit stagnant now
Conrad DeQuadros, senior economic advisor at Brean Capital LLC, said, "Those dovish individuals who hope for a significant rate cut by the Federal Reserve will pay the price. The Fed will indeed continue to cut rates, but the path of future rate cuts will be smoother
Even Federal Reserve officials have begun to respond, preparing to slow down the pace of reducing borrowing costs. On the one hand, the Federal Reserve does not want interest rates to be too high to harm the labor market, and on the other hand, it does not want interest rates to be cut too quickly to fall below neutral rates and reignite inflation. Powell recently stated, "In our efforts to find a neutral interest rate, we can be more cautious