To The Moon

As of the close on April 17, the three major U.S. stock indexes collectively closed down. The Nasdaq and S&P fell for the fourth consecutive day, the longest record since January this year.

U.S. stocks have outperformed expectations in 2023, with the S&P 500, Nasdaq, and Dow Jones rising 24.2%, 43.4%, and 13.7%, respectively. The market has also given high expectations for the performance of U.S. stocks in 2024. However, since April, the U.S. stock market has encountered a series of complex factors, causing the market to continue to be under adjustment pressure.

So does this mean that the long bull market in US stocks is coming to an end?

Will the new round of earnings season bring turmoil to US stocks?

As the global banking leader JPMorgan Chase released a mixed quarterly report last Friday, a new round of US stock earnings season officially kicked off amidst turmoil and uncertainty. Heavyweight financial institutions such as Wells Fargo, Citigroup and BlackRock have also announced their quarterly results.

Among them, BlackRock's assets under management reached a record 10.5 trillion US dollars, and its profits increased significantly; Both JPMorgan Chase and Wells Fargo's net interest income fell short of expectations; Citigroup's profits surged as companies and consumers continued to borrow more.

More heavyweights will report earnings this week. The quality of the financial report is directly related to the company's valuation and market trends, so the performance of the financial report during this period has a decisive impact on market sentiment.

Inflationary pressures and rising U.S. bond yields

The March core CPI announced by the United States last Wednesday rose by 0.4% month-on-month, exceeding economists' consensus expectation of 0.3%; The year-on-year growth rate remained stable at 3.8%, the same as last month. This indicator has exceeded the consensus expectations of economics for three consecutive months.

At the same time, the monthly rate of retail sales in the United States in March was 0.7%, exceeding market expectations of 0.3%, a new high since September last year, and the previous value was raised from 0.6% to 0.9%.

After the release of these higher-than-expected inflation data, the market reduced bets on the possibility of a Fed rate cut. The continued high inflation has made the Federal Reserve more cautious in cutting interest rates, and investors' expectations for interest rate cuts have gradually come to nothing.

This change not only affected the market's liquidity expectations, but also exacerbated investors' concerns about future economic trends. In the case of persistent inflationary pressures, the trend of the US stock market may be suppressed to a certain extent.

Geopolitics intensifies pressure on US stocks

The market turmoil was also exacerbated by heightened geopolitical tensions following Iran's unprecedented attack on Israel in the early hours of April 14. Tensions in international relations may not only affect global trade and investment, but may also trigger panic in the market.

In the case of heightened risk aversion, investors may choose to withdraw funds from the stock market, further intensifying the adjustment pressure on the market and bringing uncertainty to the US stock market.

Based on the above factors, the market outlook of the US stock market is full of uncertainties.

Maintain a cautious and rational investment attitude

When investors make investment decisions, they can consider configuring CME group's micro E-mini futures contracts for risk hedging.

The specifications of micro E-mini futures contracts are only one-tenth of those of traditional E-mini futures, enabling more Traders can trade futures more conveniently. Margin requirements are lower, but also offer the opportunity to trade U.S. indexes such as the S&P 500, Nasdaq ‑ 100, Dow Jones Industrial Average and Russell 2000. Market activity for the contract is also very high, with an average daily trading volume of more than 2.2 million contracts in the first quarter of 2024 and open interest of 385,000 contracts for all contracts (an increase of 7% compared to 2023).

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