Overnight U.S. Stocks | CPI scares off rate cut expectations, NASDAQ Golden Dragon China Index closes up 2.7%, Alibaba rises nearly 5%

According to Zhitong Finance, on Wednesday, the three major indices had mixed results. The U.S. January CPI exceeded expectations, indicating increased inflationary pressures, prompting economists to lower their interest rate cut expectations for the Federal Reserve.

【U.S. Stocks】 At the close, the Dow Jones Industrial Average fell by 225.09 points, a decrease of 0.50%, closing at 44,368.56 points; the Nasdaq rose by 6.09 points, an increase of 0.03%, closing at 19,649.95 points; the S&P 500 index fell by 16.53 points, a decrease of 0.27%, closing at 6,051.97 points. Amazon (AMZN.US) and Nvidia (NVDA.US) both fell over 1%, while Tesla (TSLA.US) rose by 2.4%. The NASDAQ Golden Dragon China Index closed up 2.7%, with Alibaba (BABA.US) rising nearly 5%, reaching a new high since July 2022.

【European Stocks】 The German DAX 30 index rose by 108.39 points, an increase of 0.49%, closing at 22,142.52 points; the UK FTSE 100 index rose by 27.87 points, an increase of 0.32%, closing at 8,805.26 points; the French CAC 40 index rose by 15.23 points, an increase of 0.19%, closing at 8,044.13 points; the Euro Stoxx 50 index rose by 12.94 points, an increase of 0.24%, closing at 5,403.85 points; the Spanish IBEX 35 index rose by 143.10 points, an increase of 1.12%, closing at 12,909.00 points; the Italian FTSE MIB index fell by 44.05 points, a decrease of 0.12%, closing at 37,538.00 points.

【Asia-Pacific Stock Markets】 The Nikkei 225 index rose by 0.42%, the South Korean KOSPI index rose by 0.37%, and the Jakarta Composite Index in Indonesia rose by 1.74%.

【Cryptocurrency】 Bitcoin briefly fell by 2.3% to a low of $94,121. As of the time of publication, Bitcoin rose by 1.79%, with the price returning above $97,000.

【Gold】 In New York's late trading, spot gold rose by 0.20%, priced at $2,903.49 per ounce. After the U.S. CPI inflation data was released at 21:30 Beijing time, it fell to $2,864.21, refreshing the daily low, before rebounding. COMEX gold futures fell by 0.18%, priced at $2,927.30 per ounce, spending most of the day in a downward trend, refreshing the daily low to $2,886.50 at 21:31, and then rising to $2,936.50 at 01:14 (as the Federal Reserve Chairman Powell's hearing was nearing its end), refreshing the daily high.

【Crude Oil】 The April delivery Brent crude oil futures on the Intercontinental Exchange fell by $1.09, a decrease of 1.42%, priced at $75.91 per barrel. The March delivery West Texas Intermediate (WTI) crude oil on the New York Mercantile Exchange fell by $1.14, a decrease of 1.55%, priced at $72.18 per barrel.

【U.S. Dollar】 In New York's late trading, the ICE U.S. Dollar Index was roughly flat, priced at 107.936 points. After the U.S. CPI data was released at 21:30 Beijing time, it surged significantly, refreshing the daily high to 108.523 points before giving back gains. During the Federal Reserve hearing, it continued to decline, and at the end of Powell's hearing, it refreshed the daily low to 107.627 points The Bloomberg Dollar Index rose 0.11% to 1301.44 points, with an intraday trading range of 1298.17-1306.57 points.

【Macroeconomic News】

U.S. inflation unexpectedly rises in January, supporting a gradual rate cut by the Federal Reserve. The annual inflation rate in the U.S. unexpectedly rose to 3% in January, while economists had expected it to stabilize at December's 2.9% level, supporting the case for the Federal Reserve to proceed with gradual rate cuts, which negatively impacted the stock market and government bonds. The month-on-month increase in January also exceeded expectations, coming in at 0.5%, higher than the anticipated 0.3%. Following the data release, there was a significant sell-off in government bonds and stock futures. The two-year U.S. Treasury yield, closely tied to interest rate expectations, surged to 4.37%. S&P 500 futures and Nasdaq futures both fell by over 1%.

Federal Reserve Chairman Powell warns against overinterpreting CPI data. Federal Reserve Chairman Jerome Powell warned on Wednesday not to overinterpret the data showing the Consumer Price Index (CPI) had its largest month-on-month increase in over a year, while also acknowledging that the reading was significantly higher than expected. During a hearing before the House Financial Services Committee, Powell stated: "The CPI reading is almost above all forecasts, but I want to remind you of two things. First, we will not get excited about one or two good readings, nor will we get excited about one or two bad readings. Second, our inflation target focuses on the Personal Consumption Expenditures (PCE) price index because we believe it is a better measure of inflation. Therefore, you need to know how to convert from CPI to PCE, and tomorrow we will get more relevant data from the Producer Price Index (PPI). Later tomorrow, we will know how the PCE reading looks."

U.S. budget deficit reaches $840 billion in the first four months of fiscal year 2025. The federal budget gap in the U.S. expanded to a record $840 billion in the first four months of the fiscal year, driven by increased spending in areas such as healthcare, Social Security, and interest payments on debt. The Treasury Department stated that the deficit increased by $129 billion just in January. After adjusting for calendar differences, the cumulative deficit from October to January widened by 25%. A senior Treasury official noted that the 2024 figures were inflated by deferred tax payments related to natural disasters in 2023. Total spending over the past four months amounted to $2.44 trillion, growing by 7% after adjusting for calendar differences.

Altman announces OpenAI will soon release the new GPT-4.5 model. OpenAI CEO Sam Altman stated in a series of posts on social network X on Wednesday that the model internally referred to as Orion will be launched "in a few weeks." Bloomberg reported in November that Orion had not yet achieved the performance expected by OpenAI. The release of GPT-4.5 will mark the end of an era for OpenAI. Altman indicated that this model will be the last one the company releases that does not use additional computing power to mimic human reasoning. OpenAI has adopted reasoning models in some of its updated models, including o1 and o3. Apart from Altman's statement, OpenAI representatives declined to comment 【Individual Stock News】

Cisco (CSCO.US) has an optimistic revenue outlook for this fiscal quarter as AI demand boosts enterprise network spending. Networking equipment giant Cisco has an optimistic revenue outlook for this fiscal quarter, benefiting from increased spending by enterprises on computing infrastructure to leverage artificial intelligence technology. Cisco reported its earnings after the market closed on Wednesday, stating that revenue for the quarter ending in April is expected to be between $13.9 billion and $14.1 billion. Analysts had previously forecasted at the lower end of this range. Cisco also raised its revenue target for fiscal year 2025 by about $1 billion to over $56 billion, while the average estimate was $55.97 billion. Cisco's stock price rose about 6% in after-hours trading. Enterprise customers have been increasing their investments in network systems equipment to help accelerate AI deployment. Cisco's revenue outlook suggests that this spending by customers will help offset weakness in federal government orders.

Intel (INTC.US) rises as Baird reports the company may partner with TSMC for a joint wafer fab. Intel continued its upward trend on Wednesday, rising a cumulative 16% over the past three days. A report from Baird stated that the U.S. government may be involved in a plan involving Intel and TSMC. TSMC will send engineers to Intel's 3nm/2nm wafer fab to utilize their expertise to ensure the fab and Intel's subsequent manufacturing projects become feasible. Intel may spin off the wafer fab to create a jointly held company with TSMC, which would be operated by TSMC and funded through the U.S. CHIPS Act. Analyst Tristan Gerra wrote that while this news has not been confirmed and will take a long time to complete, the project has its rationale. Baird has a neutral rating on Intel stock with a target price of $20.

【Major Firm Ratings】

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