Breakfast | Tesla falls 4% after earnings! Quantum computing concept stocks plummet

Market Overview

Netflix and Texas Instruments reported weak performance, coupled with escalating global trade tensions, dampening risk appetite. The sell-off of "momentum stocks" continues, with the Nasdaq leading the decline among the three major U.S. stock indices.

Apple ended its consecutive gains, falling 1.64%. Google announced a significant breakthrough with its quantum chip "Willow," leading to a sharp decline in quantum computing stocks, with QBTS plummeting 15% and RGTI dropping nearly 10%. EDA software stocks experienced a sharp intraday drop.

The yield on the 10-year U.S. Treasury bond fell for the third consecutive day, down 0.58 basis points. The dollar ended its three-day rise, initially rising before falling, and dropped 0.36% from its daily high. Bitcoin retraced all of yesterday's gains, falling below the $108,000 support level. Ethereum dropped 5%.

Gold briefly fell to near $4,000, then fluctuated widely, with an intraday range of 3.7%. Silver declined during the session, but $48 provided support. Comex gold and silver in New York closed higher compared to Tuesday. The Russia-Ukraine situation pushed U.S. oil up about 3.2%.

During the Asian session, the ChiNext Index fell 0.8%, Agricultural Bank of China hit a new historical high, the Hang Seng Index dropped over 1%, Lao Pu Gold fell over 8%, government bonds rebounded, and Shanghai gold fell 4% against the trend.

Key News

The expiration of tax credits stimulated Tesla's Q3 revenue rebound, but profits unexpectedly plummeted by 31%, with tariff impacts exceeding $400 million. Elon Musk stated that Optimus 3 may be released in the first quarter of next year; Samsung and TSMC will participate in the design of AI 5 chips. The stock price fell by as much as 4% in after-hours trading.

SAP, the largest weighted stock in European markets, reported cloud revenue below expectations for the third quarter, with its stock price dropping 4% in after-hours trading.

IBM's Red Hat business growth slowdown raised investor concerns, leading to a 5% drop in stock price after hours.

Wall Street is experiencing the strongest earnings season in four years, with 85% of S&P 500 companies exceeding profit expectations.

The subprime lending market is experiencing turmoil again, with PrimaLend filing for bankruptcy.

Gold ETF holdings reached a new high since 2022. Goldman Sachs traders noted: the gold price chart looks like a collapse of a speculative stock. After a sharp overnight drop in gold and silver, traders are closely watching the "technical failure line": $4,000 for gold and $48 for silver.

The Federal Reserve's "historic" Fintech conference: Waller emphasized the active embrace of payment innovation, proposing the concept of "streamlined main accounts," while Cathie Wood stated that AI has ushered in the "Agent business" era. Regulatory winds are shifting, with the Federal Reserve considering lowering bank capital requirements from 19% to a minimum of 3%. The lack of Federal Reserve data exacerbates the situation, with the "New Federal Reserve News Agency" reporting that ADP has terminated data sharing with the Federal Reserve.

The U.S. government shutdown has entered its 22nd day, setting the second-longest record in history, with the unemployment rate potentially rising temporarily!

Trump announces the cancellation of the meeting with Putin in Budapest. Reports indicate that the U.S. has lifted key restrictions on Ukraine's use of long-range missiles. For the first time since Trump took office, the U.S. has imposed sanctions on two major Russian oil companies. Oil prices surged 4% during trading.

Indian media: India and the U.S. are close to reaching a trade agreement, with tariffs reduced from 50% to 15%.

Goldman Sachs “Double Eleven” observation: The earliest start time in history, AI significantly enhances efficiency conversion.

Apple's iPhone Air launch in China has met with a lukewarm response, with most customers only trying it out without purchasing. There are also reports that iPhone Air is currently in a paused production state.

Google announces a major breakthrough with the quantum chip “Willow”: the algorithm can be repeatedly verified, and practical application may be achieved within five years.

Market Closing Report

U.S. and European Stock Markets: The S&P 500 fell 0.53%, closing at 6699.40 points. The Dow Jones Industrial Average dropped 0.71%, closing at 46590.41 points. The Nasdaq Composite decreased by 0.93%, closing at 22740.396 points. The European STOXX 600 index closed down 0.18%, at 572.29 points.

A-shares: The Shanghai Composite Index closed at 3913.76 points, down 0.07%; the Shenzhen Component Index closed at 12996.612 points, down 0.62%; the ChiNext Index closed at 3059.32 points, down 0.79%, with a turnover of 416.5 billion yuan.

Bond Market: The yield on the U.S. 10-year Treasury bond fell by 1.15 basis points, closing at 3.9512%. The yield on the 2-year U.S. Treasury bond fell by 1.48 basis points, closing at 3.4403%.

Commodities: COMEX gold futures rose 0.22%, closing at $4118.20 per ounce. COMEX silver futures rose 1.03%, closing at $48.195 per ounce. WTI December crude oil futures closed up 2.20%, at $58.50 per barrel. Brent December crude oil futures rose 2.07%, closing at $62.59 per barrel.

Key News Details

Global Highlights

The expiration of tax credits stimulates Tesla's Q3 revenue rebound, but profits unexpectedly plummet by 31%, with tariff impacts exceeding $400 million.

• Tesla's Q3 revenue shifted from a 12% decline in Q2 to a 12% increase, with growth far exceeding analyst expectations, and automotive revenue reaching a nearly two-year high; EPS profit fell 31% year-on-year, with "carbon sales" revenue declining for five consecutive quarters to a two-year low; energy storage business revenue increased by 44%, with gross profit reaching a new high of $1.1 billion; South Korea has become the company's third-largest market, and the launch of the monitoring version of FSD in Central Europe is still awaiting regulatory approval; Cybercab, Semi, and Megapack 3 are planned for mass production next year; production guidance has not yet been provided.
• The CFO stated that tariffs and competition are the two major obstacles. Elon Musk mentioned that Optimus 3 may be released in the first quarter of next year, and it will become an incredible surgeon; Samsung and TSMC will both participate in the design of the AI 5 chip. Tesla's stock fell more than 4% in after-hours trading.

“The largest weighted stock in European markets” SAP's third-quarter cloud revenue fell short of expectations, and the stock price dropped 4% in after-hours trading. Europe's highest-valued software company SAP announced its third-quarter financial report, showing overall solid performance but slightly lower cloud business revenue than market expectations, leading to a nearly 4% drop in stock price after hours. The company maintains its growth outlook for the full year of 2025, expecting cloud revenue to be at the lower end of the guidance range and operating profit to be at the higher end. Management stated that despite the uncertain macro environment, SAP's cloud business still demonstrates resilience; analysts pointed out that trade disputes and a slowdown in manufacturing customer spending have put pressure on quarterly performance.

IBM's Red Hat business growth slowdown raises investor concerns, and the stock price fell 5% in after-hours trading. Although IBM's revenue and earnings per share for the third quarter both exceeded Wall Street's expectations and the company raised its full-year free cash flow guidance, the disappointing revenue from the highly profitable software and cloud services Red Hat division raised concerns among investors who view the software business as one of the keys to the company's growth.

Wall Street welcomes the strongest earnings season in four years, with 85% of S&P 500 companies exceeding earnings expectations. So far, about 85% of S&P 500 companies that have reported third-quarter results have exceeded profit expectations, marking the highest proportion since 2021. JPMorgan expects S&P 500 constituents to achieve approximately 12% double-digit earnings growth, higher than the market's general expectation of 7.7%.

The subprime lending market is experiencing turmoil again, with PrimaLend filing for bankruptcy. PrimaLend Capital Partners filed for bankruptcy after months of negotiations with creditors and failing to make timely interest payments, becoming the latest sign of stress in the U.S. economy's low-income consumer sector. PrimaLend's bankruptcy filing occurred a few weeks after another "buy here, pay here" dealer, Tricolor Holdings, filed for bankruptcy. JPMorgan CEO Jamie Dimon warned last week that there may be more problems in the credit sector, stating that when you see one cockroach, there are usually more Gold ETF Holdings Reach New Highs Since 2022. Gold prices experienced the largest single-day drop since 2013 on Tuesday, with spot gold down approximately 2.2% around 11:40 PM Beijing time on Wednesday; by the end of trading in New York on Wednesday, the decline in spot gold narrowed, and gold futures turned slightly higher. At this time, the number of physical-backed gold ETFs held by investors has climbed to the highest level in three years. Analysts point out that the recent rise in gold has been accompanied by a significant expansion in ETF size, with ETF funds being typical fast-moving capital, leading to often volatile market conditions.

Why Did Gold Prices Plummet? Goldman Sachs Trader: The Gold Chart Looks Like the Collapse of a Meme Stock. Goldman Sachs analyzes that this plunge has no "obvious trigger," mainly attributing it to the extreme crowding of long positions after nine consecutive weeks of gains, which triggered a technical "liquidation." ETFs became the main battleground for this round of selling, with gold ETF trading volume at one point accounting for 8% of the total nominal trading volume of all listed ETFs in the U.S., setting a record high. Traders suggest this could be a "buying opportunity," and once signs of market stabilization appear, funds will flow in.

Historical Review After 9 Weeks of Gold Gains: Typically a 20%-40% Correction in the Next Year, Only 1970 as an Exception. Guosen Securities states that it has reviewed the market trends following several instances of gold rising for nine consecutive weeks in history, and investors need to prepare psychologically and manage positions for a potential adjustment lasting several months, with a magnitude of 20%-40%. However, the long-term bullish logic for gold remains solid, supported by factors such as the reconstruction of the global monetary credit system, de-dollarization trends, continuous gold purchases by central banks, and structural supply-demand imbalances.

After Overnight Plunge in Gold and Silver, Traders Focus on "Technical Success-Failure Lines": Gold at $4000, Silver at $48. On Tuesday, spot gold plummeted 6.3%, nearing the $4000 per ounce mark; silver hovered around the $48 "success-failure line." Analysts point out that these two price levels coincide with their respective 21-day moving averages, serving as key support in the bull-bear showdown. If gold falls below $4000, the next support may be at $3800; if silver loses $48, it may drop to $44.

The Federal Reserve's "Historic" Fintech Conference: Waller Emphasizes Actively Embracing Payment Innovations, Proposes "Streamlined Main Account" Concept, Cathie Wood Claims AI Opens the "Agent Business" Era

• Waller proposed the concept of a "streamlined main account" to provide basic payment services for non-bank payment companies, with a faster approval process but limited functionality. This also means that stablecoin issuers and crypto payment companies are expected to directly access the Federal Reserve's payment system.
• Cathie Wood suggested that AI-driven "agent payment systems" will usher in the era of "Agent Commerce," where AI can not only "know" but also "execute," making financial decisions on behalf of users autonomously. She predicts that AI and blockchain will jointly unleash tremendous productivity, with the U.S. real GDP growth expected to reach 7% in the next five years.

Regulatory winds are shifting, the Federal Reserve is considering lowering bank capital requirements from 19% to a minimum of 3%. The Federal Reserve has presented a revised proposal to other U.S. regulatory agencies, with some officials estimating that the new plan will reduce the overall capital increase for most large banks to between 3% and 7%, a figure significantly lower than the 19% increase proposed in 2023 and also below the 9% increase suggested in last year's compromise version.

The Federal Reserve's data loss exacerbates the situation! "New Federal Reserve News Agency": ADP terminates data sharing with the Federal Reserve. Since at least 2018, ADP has provided data sets to the Federal Reserve covering 20% of the private sector workforce in the U.S., with a delay of only about a week. Shortly after Federal Reserve Governor Waller's speech at the end of August raised concerns about the Fed's long-term use of ADP's weekly payroll data, ADP stopped providing data to the Fed. The use of ADP data by the Federal Reserve is not new. Powell has attempted to persuade ADP to resume data sharing but has not yet succeeded. The data loss carries new significance amid the U.S. government shutdown.

The U.S. government shutdown has entered its 22nd day, setting the second-longest record in history, and the unemployment rate may temporarily rise! Bloomberg economist Anna Wong stated that the shutdown will lead to a temporary slight increase in the unemployment rate, but it will fall back to 4.3% after the government reopens. Morgan Stanley estimates that 750,000 federal employees will be forced to take unpaid leave daily, and although they will eventually receive back pay, they will be counted as unemployed in statistics, potentially "technically" pushing the unemployment rate up by 44 basis points.

Trump cancels meeting with Putin in Budapest. U.S. President Trump stated that he believes it is "inappropriate" to meet with Russian President Putin, thus canceling the meeting in Budapest. Trump expressed that he thinks it is time to impose sanctions on Russia and hopes that the sanctions will not last too long.

• Reports indicate that the U.S. has lifted key restrictions on Ukraine's use of long-range missiles, causing crude oil prices to surge, rising over 4% during trading Media reports indicate that the U.S. policy adjustments allow Ukraine to strengthen attacks on targets within Russia, aiming to increase pressure on Russia to end the conflict. The Ukrainian military stated on Tuesday that they used the British-supplied "Storm Shadow" missiles to breach Russian air defense systems and conducted large-scale airstrikes on Russian chemical plants. U.S. officials expect Ukraine to carry out more cross-border attacks using "Storm Shadow." After Trump called the reports fake news, the increase in U.S. oil prices narrowed to around 3%. The U.S. Treasury Department issued a statement, including Rosneft and other oil companies in the new sanctions targets against Russia, marking the first time since Trump took office that the U.S. has imposed sanctions on two major Russian oil companies.

Indian media: India and the U.S. are close to reaching a trade agreement, with tariffs reduced from 50% to 15%. According to Indian media Mint, India and the U.S. are nearing a trade agreement. India may agree to gradually reduce oil imports from Russia in exchange for tariff concessions from the U.S. Previously, the Times of India reported that the first phase of the trade agreement is expected to be finalized between October and November. The goal of the agreement is to increase bilateral trade to $500 billion by 2030.

Goldman Sachs "Double Eleven" observation: The earliest start time in history, AI significantly improves efficiency conversion. Goldman Sachs stated that this year's Double Eleven set a record for the "earliest start" and the longest duration, with the entire shopping festival period extended to 31-57 days. AI has significantly improved efficiency conversion, with six AI tools from Alibaba showing remarkable effects in increasing click-through rates (total clicks from recommendations +10%) and merchant ROI (+12%). By extending the user behavior analysis period from 0.5 years to 10 years and increasing the processing instances from 1,000 to 100,000, the algorithm improved purchasing efficiency by 25%. Additionally, AI customer service has been adopted by 1.58 million merchants, saving an average of 20 million yuan per day for merchants.

Apple iPhone Air's debut in China is lukewarm, most customers only try but do not buy, production has been suspended? The market response to Apple's new iPhone Air has been tepid, with no scenes of long queues in stores, "more onlookers than buyers." The model is priced at 7,999 yuan and only supports eSIM cards, which has led to its launch in China being a month later than globally and may be one of the factors affecting its sales. There are also reports that iPhone Air is currently in a state of suspended production.

Google claims major breakthrough with quantum chip "Willow": Algorithm can be repeatedly verified, practical application may arrive within five years. Google announced on Wednesday that its "Willow" quantum computing chip successfully ran a new algorithm called "Quantum Echoes," which is 13,000 times faster than the world's strongest supercomputer and achieved results that can be repeatedly verified across different quantum platforms for the first time This achievement has been published in the journal Nature and is regarded as an important step towards the practical application of quantum computing. The research team stated that this algorithm can be used for molecular structure calculations, opening new directions for drug development and battery design, with the goal of achieving practical application within five years.

Domestic Macro

Learning Times: Promote the expansion and quality upgrade of consumption with more powerful policy coordination. Learning Times published an article stating that financial interest subsidies and financial credit linkage should be improved to accurately guide the flow of funds into the consumption sector; regulatory and industrial policies should be promoted to support the healthy development of new consumption formats; policy space coordination should be advanced through consumption-centered cities and counties; short-term incremental policies should be combined with deepening reforms to build a long-term mechanism for expanding consumption through reforms in income distribution, social security, and other systems, allowing residents to "be able to consume, dare to consume, and be willing to consume."

Goldman Sachs: A "slow bull" market is forming in the Chinese stock market, with key A/H indices expected to rise 30% by the end of 2027. Goldman Sachs stated that the Chinese stock market will enter a more sustained upward phase, with key indices expected to have about a 30% upside by the end of 2027, mainly driven by a 12% growth in profit trends and a 5%-10% further revaluation potential.

Domestic Companies/Industries

Asian stock exchanges begin to "boycott" digital currency treasury companies, reports say the Hong Kong Stock Exchange has rejected at least five applications. Reports indicate that major Asian stock exchanges, including those in Hong Kong, India, and Australia, are collectively resisting the listing applications of "digital asset treasury" companies that primarily buy and hold cryptocurrencies. The Hong Kong Stock Exchange has rejected at least five applications citing "cash company" rules. The Australian exchange has also restricted listed companies from allocating more than half of their balance sheets to cash-like assets.

Energy storage expansion will become a global trend, with China's exports surging by 220%. Chinese battery manufacturers are leading the global market with strong export growth. In the first half of the year, Chinese energy storage companies received a total of 186 GWh in overseas orders, a year-on-year increase of over 220%. The deployment of energy storage globally is also accelerating, with institutions predicting that global investment in the battery storage sector will reach approximately $1.2 trillion by 2034 to support the large-scale integration of renewable energy.

Zhu Gongshan of GCL Group: The photovoltaic supply-side reform may be basically completed next month. Zhu Gongshan stated, "The new energy sector, especially our photovoltaic industry, has implemented supply-side reforms, which are ongoing, and I think it will be basically completed next month. The photovoltaic industry is expected to fully enter a turning point of improved supply-demand relations next year "The prices in the industrial chain are gradually stabilizing and recovering, leading to a restoration of profitability within enterprises."

China Unicom's revenue in the first three quarters increased by 1.0% year-on-year, net profit grew by 5.1%, and 'Unicom Cloud' revenue reached 52.9 billion yuan.

Overseas Macro

Goldman Sachs traders: Momentum stocks plummet, the 'hottest stocks' in the US face the 'largest sell-off'. Momentum stocks, which have led the market this year, are experiencing a severe sell-off, with strong liquidations occurring within the market. Goldman Sachs traders warn that this decline may not be over yet, influenced by the historically weak seasonal patterns at year-end and the extreme crowding of hedge fund positions. Funds are shifting from high-volatility tech concept stocks to stable 'quality stocks', indicating a significant reversal in market risk appetite.

The depreciation of the yen drives Japan's September exports to grow by 4.2%, rebounding for the first time in five months! Japan's exports to Asian markets grew by 9.2% in September, with key drivers being a 12.6% surge in shipments of chips and electronic components. However, ongoing US tariffs continue to drag down exports to the US, which have contracted for six consecutive months, with significant declines in products like automobiles. Economists warn that if the yen appreciates and the global economy slows, exports will remain under pressure.

The first economic stimulus plan unveiled by Prime Minister Kishi Nobuo may exceed 13.9 trillion yen! Japan's new Prime Minister Kishi Nobuo is working on an economic stimulus plan that may exceed last year's 13.9 trillion yen, with an announcement possible as early as next month. The plan will focus on addressing inflation, investing in growth industries, and national security. Specific measures include energy subsidies and encouraging companies to raise wages, while also investing in strategic areas like AI and semiconductors and enhancing supply chain resilience.

Kishi Nobuo's government plans to purchase US soybeans, pickups, and natural gas, preparing for talks with Trump next week. In preparation for next week's meeting with US President Trump, the Japanese government is finalizing a package of procurement plans, including US pickups, soybeans, and natural gas, to show goodwill in trade and security negotiations. Officials will also submit a list of candidate projects under a $550 billion investment agreement for review by both governments, with the final selection to be made by Trump.

Zinc prices rise for three consecutive days! Traders scramble for inventory, LME zinc market faces the tightest situation in decades. Currently, there are only 24,425 tons of zinc available for extraction in LME warehouses, which is insufficient to meet even one day's demand for a global market with an annual consumption of 14 million tons, putting significant pressure on short sellers to cover positions or deliver physical zinc

Overseas Companies

Samsung and Google join forces to launch Galaxy XR smart headset, equipped with Gemini, challenging Apple's and Meta's positions. Samsung, in collaboration with Google and Qualcomm, released the Galaxy XR headset featuring the Android XR system and Gemini AI, supporting gesture and eye tracking, capable of analyzing objects within the field of view and providing information, priced at $1,799. Samsung stated that the headset is the first step, with a strategic focus on laying the foundation for future lightweight "AI glasses."

Airbnb CEO: Self-developed AI agents heavily rely on Alibaba's Qianwen model, faster and cheaper than OpenAI. The choice of AI models by enterprises is shifting from technological leadership to cost-effectiveness considerations. The Airbnb CEO admitted that although the company's AI customer service agents are built on 13 different models, they heavily rely on Alibaba's Qianwen model; OpenAI's latest model is not frequently used in actual production due to the availability of faster and cheaper models.

2025 OCP Computing Power Conference: Supernode "Scale Up" is the focus of the event. Morgan Stanley believes that all technological breakthroughs at the OCP Computing Power Conference, from AMD's ultra-wide Helios cabinets to the 800V DC power supply architecture aimed at disrupting the power supply landscape, and Google's 2-megawatt liquid-cooled units, revolve around a common goal—building larger, more powerful, and more efficient gigawatt-level AI data centers.

Amazon launches "three-in-one" warehouse robot, Morgan Stanley: $4 billion savings by 2027. The new multifunctional warehouse robot system "Blue Jay" integrates multiple processes including picking, sorting, and consolidating packages, aiming to combine three previously independent robotic workstations into one. Amazon's automation efficiency and labor impact are back in focus. Morgan Stanley analysts estimated in a report on Wednesday that the promotion of automated warehouses, combined with cost reductions, could save Amazon up to $4 billion by 2027.

Birkin bags favored by American consumers, Hermès reports 9.6% sales growth in Q3.. Hermès performed particularly well in the U.S., with quarterly revenue growth of 14.1%, exceeding expectations, and improvements in the Chinese market. The company's continued robust performance further enhances market confidence that the sluggish demand for luxury goods is easing.

Kering surprises for the first time in a year: Q3 revenue declines by 10% but slows less than expected, North American sales recover, stock price jumps.. For the first time in the last five quarters, Kering's quarterly revenue exceeded analyst expectations; In the third quarter, same-store sales fell by 5%, only one-third of the decline in the second quarter. Same-store sales for the core brand Gucci dropped by 14%, with the decline narrowing by more than 40% quarter-on-quarter; North American same-store sales increased by 3%, reversing the double-digit decline of the previous two quarters. The CFO stated that new products such as Gucci's mini GG bags helped boost sales. After the earnings report was released, Kering's U.S. stock, which had fallen more than 2% in early trading, rose more than 8% at midday.

Retail investors once again "squeeze" Beyond Meat, with a 1300% surge in 4 days! Plant-based meat company Beyond Meat experienced a "short squeeze" as retail investors targeted its extremely high short interest, with the stock price surging nearly 1300% over four days. The latest catalyst was the announcement of an expanded sales network at Walmart. However, this frenzy hides significant risks: the company has just completed a debt swap that will lead to massive dilution of existing shareholders' equity, creating a good opportunity for creditors to exit at a high point.

Today's News Preview

China's September Swift RMB share in global payments.

U.S. September existing home sales.

Federal Reserve Vice Chair for Supervision Bowman and Fed Governor Barr will speak.

Forum on high-quality development and technical standards in the photovoltaic industry.

Intel will announce its earnings.