U.S. stocks fell today as the market digested the latest housing data, commodity-related news, and the renewed heated debate on AI.
Following yesterday's pullback in the leading AI stock,Tech heavyweights (AAPL, NVDA, PLTR, NFLX, GOOG/L, MU)Under pressure, these stocks accounted for over 80% of the Nasdaq 100's decline. Small-cap stocks were the worst-performing sector of the day…
- All three attempts to force a short squeeze failed...
- Goldman Sachs trading desk indicated that the decline appeared to be welcomed by traders who missed out on the previous rally (who believed the pullback would be relatively shallow).
- 需要注意的是，道指幾乎完全抹去了美聯儲會議後的漲幅……
- The US dollar rebounded strongly, returning to last week's high...
- A stronger dollar caused a rare drop in gold prices...
- Bitcoin rebounded above its 100-day moving average and tested $114,000 (the 50-day moving average level)...
- Strong new home sales data released today turned Bloomberg’s economic surprise index positive for the first time since May.
- But Bloomberg's Michael McDonough points out that this surge is mainly supported by significant price cuts and concessions from builders—39% of builders reported price reductions.
- Some of the additional discounts amount to 14% of the selling price—so this “strong economy” is unlikely to be sustainable…
Among the S&P 500, the materials sector was the worst-performing sector of the day. The market digested several news items impacting commodities, including copper and lithium. Copper prices rose by about 4% due to weather-related disruptions affecting supply at Freeport-McMoRan's (FCX) Glasberg mine (one of the world's largest copper mines). This supply disruption coincided with a structural increase in copper demand driven by energy security and grid investment. Interestingly, while lithium-related stocks (such as ALB and LAC, the latter being favored by the US government) rose, lithium prices themselves remained stable (sideways after rising in August). Goldman Sachs analyst Trina Chan noted that the divergence between stock prices and commodities may simply be due to an oversupply in the lithium market, which may continue in the short term.
Goldman Sachs' Chris Hussey points out that AI has once again become the focus of the market. The market is re-examining AI-related spending, costs, and the sustainability of demand—triggered by Micron (MU)'s earnings report last night. Despite solid results and strong forward guidance, MU's stock price still plummeted, making it one of the worst-performing stocks in the S&P 500 that day. Goldman Sachs' David Kostin and Ryan Hammond team previously emphasized that the future growth rate of capital expenditures by hyperscale cloud service providers (AMZN, GOOGL, META, MSFT, ORCL) will determine the valuation of AI infrastructure stocks and the strength of AI deals.
Looking at the market, this logic seems to be validated: the technology and communication services sector was the worst-performing sector of the day. The key question is: is this decline merely a short-term tactical correction (profit-taking), or a broader pullback? Interestingly, the utilities sector actually benefited from the capital expenditure news.
"We've gone too far," said Rich Privorotsky, a top trader at Goldman Sachs. He added that the market has seen significant gains and active investors have increased their positions considerably, but not excessively.
His view is that the sell-off should be done before the end of the year.
However, he also warned that some market dynamics seem to be overstretched... such as the divergence between cryptocurrencies and cyclical stocks, the parabolic rise of momentum stocks in the US stock market, meme stocks, and the frenzy surrounding unprofitable tech stocks.
Volatility has quietly increased in recent days, while credit spreads remain at extremely narrow levels.
The overall outlook remains bullish, but there have indeed been signs of "chasing the rally risk" in the past few weeks.
Gold buying continues unabated, hitting record highs, even as real interest rates remain stable.
This could be related to M2 money supply growth, fiscal spending, or a de facto soft dollar policy. In any case, this breakout implies an increase in the valuation of real assets.
It's worth noting that the S&P 500 has gone 36 consecutive trading days without a single-day drop exceeding -1%, the longest streak this year... However, the "Mag7" stocks significantly underperformed the broader market this week.
U.S. Treasury yields rebounded today, erasing yesterday's losses, with the entire yield curve rising 4-5 basis points (still within the range following Powell's speech, but approaching the upper limit)...
Oil prices surged today, with WTI accelerating its gains after breaking through the 100-day moving average, returning to a three-week high above $65 a barrel, as President Trump's tough rhetoric on Russia exacerbated supply concerns, with traders worried about potential supply disruptions from OPEC+ producers.
We posted on the X platform last night: "Something is absorbing a lot of liquidity."
Currently, this is not yet Bitcoin (its implied fair value relative to global liquidity is over $250,000)...
But... it might be gold...
Are we about to see a shift from physical gold back to "digital gold"?
