The recent Friday trading session delivered a significant shock to many investors holding US stocks. All three major indices fell sharply, with the Nasdaq plunging 4.18%, losing 1,121 points in a single day—its worst performance since April 2025. The S&P 500 saw its market capitalization shrink by approximately $1.8 trillion, while the Dow Jones Industrial Average also fell below the 51,000-point mark.
Technology stocks were hit the hardest, with the Philadelphia Semiconductor Index crashing over 10%. The semiconductor sector alone lost about $1 trillion in value. As investors watched their account balances plummet, many are questioning whether the bull market in US tech stocks has truly reached its end. The looming question is whether the upcoming opening of the A-share market will also be dragged down.
Immediate Catalyst for the Decline
The direct trigger for the US market slump was the May non-farm payrolls report, which showed an addition of 172,000 jobs, significantly exceeding market expectations by a factor of two. Revisions for March and April added a combined 93,000 jobs, marking the strongest three-month job growth in two years. This unexpectedly strong employment data fundamentally disrupted global asset pricing assumptions.
The market had previously anticipated the Federal Reserve would begin an interest rate cutting cycle in the second half of the year. However, following the data release, the interest rate market swiftly reversed. Data from the Chicago Mercantile Exchange shows the probability of a Fed rate hike by December has surged to over 70%, essentially extinguishing expectations for rate cuts this year. Major Wall Street institutions, including Goldman Sachs, have revised their forecasts, formally abandoning predictions for rate cuts this year and pushing the expected timing of the first cut back significantly to 2027.
Impact on High-Growth Stocks
A sustained high-interest-rate environment is particularly damaging for high-valuation growth stocks. The AI sector, which has been the core driver of the current US bull market, finds itself on the front lines. This pressure was compounded by Broadcom's recent earnings guidance falling short of expectations, which undermined market faith in sustained high growth for all AI-related companies and triggered a concentrated wave of profit-taking.
Evaluating the Market's Future Path
Faced with such a severe decline, investors are asking whether this is a normal correction within an ongoing tech bull market or the beginning of a longer-term downtrend.
From a fundamental perspective, the US economy is exhibiting a state of "strong growth with sticky inflation." This suggests the Federal Reserve will likely be forced to maintain a higher-for-longer interest rate policy, creating sustained pressure on US stock valuations that are already at historically elevated levels.
However, it is premature to declare the end of the US bull market. The key to the market's future direction will likely hinge on the first Federal Open Market Committee meeting chaired by the new Fed Chair, scheduled for June 16-17. If the new Chair conveys a clearly hawkish signal, or even hints at a potential rate hike, US stocks could face further adjustment. Conversely, if the Fed emphasizes data dependency and maintains a patient stance, market sentiment could gradually recover.
Implications for the A-Share Market
For the A-share market, the US decline will exert some influence, but investors need not panic excessively. Historical patterns show that the correlation between A-shares and US stocks has weakened significantly in recent years. The divergence in economic cycles and monetary policies between China and the US provides a foundation for the A-share market to chart its own course.
In the short term, a decline in global risk appetite will pressure A-shares. Sectors closely tied to the US industry chain will face greater stress. This is particularly true for areas like optical modules, memory chips, and AI servers, where over 70% of revenue often comes from North American cloud providers. An expected cooling in overseas computing capital expenditure will directly dampen order expectations for these companies. Northbound capital flows may also see short-term safe-haven outflows, further increasing market volatility.
From a medium- to long-term perspective, current A-share valuations remain relatively low compared to their US counterparts. Coupled with China's accommodative monetary policy, ongoing pro-growth measures, and a gradually emerging economic recovery, the A-share market has the potential to follow an independent trajectory.
Final Perspective for Investors
In essence, this US market "Black Friday" is not necessarily a harbinger of a global crisis, but rather reflects the interplay of the US economic cycle and its monetary policy. For the average A-share investor, the most critical action now is not to panic and sell in tandem with the downturn, but to maintain composure. Rather than reacting hastily, it may be more prudent to focus on identifying potential opportunities among stocks that may have been oversold, all while carefully managing portfolio exposure.
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