Cross-Border US ETF Hits Record High; Tech Giants Fuel Further 10%+ Gains?
On July 2nd, due to the relentless momentum of American tech giants, the domestic listed exchange-traded fund (ETF) pegged to the NASDAQ index (513300) once again reached a historical high, touching levels near 1.923 at one point, and eventually closing at 1.901, with a recent trend of rising premium rates. The ETF pegged to the S&P 500 (513850) is also near its historical high.
Tech giants have lifted the overall performance of the U.S. stock market indices. NVIDIA has led the pack this year with a 158% increase, while other tech giants have also maintained their momentum, driven by the AI wave. Despite occasional concerns about tech giants and a recent correction in NVIDIA's stock price, traders continue to short the NASDAQ 100 index, which closed at 19,812.22 points on the 2nd.
Currently, institutions generally believe that the NASDAQ index is still expected to break through the 20,000-point mark, with the tech-intensive index up nearly 20% since the beginning of the year, leading the three major indices. Wang Xinjie, Chief Investment Strategist at Standard Chartered China Wealth Management, told First Financial Daily that historical data shows that the U.S. stock market usually continues to perform well after breaking through previous highs. The cumulative average increase of the S&P 500 index in the 12 months after reaching new highs is 13.2%, with a median increase of 14.6%.
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The NASDAQ ETF continues to set new highs, with strong buying interest from Chinese investors, which also led to a premium rate of 5.25% on July 2nd, having previously been below 2%.
Fawad Razaqzada, a senior analyst at Gain Capital Group, told reporters, "The NASDAQ 100 index has been breaking through historical highs, and the bullish sentiment is still dominant, which may make some people uncomfortable because there has been no deeper correction after the slight pullback since last Thursday. If it exceeds the 20,000-point mark, there is no obvious subsequent upward reference point. In terms of support levels, the thresholds are at 19,650 points and 19,470 points, with a more important support level near 19,100 points, which is the bullish trend line from April."
In the view of institutions, the future momentum of the stock index will largely depend on whether the technology sector will lift again. Judging from the bullish price trends of stocks such as Amazon (AMZN), Alphabet (GOOG), NVIDIA (NVDA), and Tesla (TSLA), traders may not bet against another tech-driven rally. Among them, the leading key stock is NVIDIA, as it has a significant impact on the NASDAQ 100 index.
On June 24th, NVIDIA's stock closed down 6.7%, marking the largest drop in two months, with a cumulative drop of 12.88% over three consecutive days. Despite the correction, as of that date, driven by the surge in demand for AI chips, NVIDIA's stock price has still risen by about 138.5% this year, making it the second-best performing company among the S&P 500 index constituents, second only to another AI concept stock, Advanced Micro Devices (AMD), with a 190.92% increase.In the latter half of last week to the present, Nvidia appears to have found support near $118, closing at $124.3 on the morning of July 2nd. A private equity investment manager told reporters that recently, Nvidia's major clients (mainly members of the "Tech Seven Giants") have given a positive outlook on capital expenditures related to generative AI, with Nvidia's GPUs being in extremely high demand. For instance, Alphabet stated that the company has made good progress in generative AI-related services and mentioned that due to investments in technological infrastructure, capital expenditures in the remaining quarters of 2024 may exceed the first quarter (approximately $12 billion); regarding capital expenditures, Microsoft stated that there would be a substantial sequential increase in the June quarter and indicated that capital expenditures for the fiscal year 2025 would grow year-over-year, with the company aiming to meet the increasing demand for cloud and artificial intelligence products.
Some institutions that have positioned themselves in Nvidia also maintain a cautiously optimistic attitude. A QDII investment manager previously mentioned to reporters that in the medium to long term, Nvidia's data center GPU business faces two challenges: on one hand, the competitive landscape for general-purpose GPUs is deteriorating, with AMD and Intel both entering the market, which may not be able to maintain such high prices and profit margins; on the other hand, each CSP (cloud service platform, such as Amazon's AWS, etc.) has a significant motivation and capability to develop their own dedicated AI acceleration chips. Although it is still difficult to provide general computing services to the outside world in the foreseeable future, the fact that they are replacing a portion of existing Nvidia chips for internal use is happening.
Recently, after a bullish consolidation, Amazon broke through the $190 mark, closing at $197.2 on the morning of July 2nd, setting a new historical high. With this, it became the fifth member of the "Seven Giants" stocks to exceed a market value of 2 trillion. "This breakthrough is obviously a bullish development, and it may help maintain the rise of tech stocks when leaders like Nvidia take a breather. As the stock sets a historical high, it may rise to $195 before touching $200," said Lazard.
In addition, Alphabet has also set a new historical high recently. In fact, Alphabet has been breaking new highs, breaking through the resistance level of $180 in the past week.
Tesla, which is caught in a price war, continues on the path of repair, with the stock previously surging above the former resistance level of $180, and this week breaking through the $200 mark.
Focusing on Non-Farm and Federal Reserve Meeting Minutes
This week, macro dynamics will also affect the trend of US stocks, especially the US June non-farm report, Federal Reserve Chairman Powell's speech, and the Federal Reserve meeting minutes.
At 02:00 on July 4th (Thursday) Beijing time, the June Federal Reserve meeting minutes will be released. In the June meeting, the Federal Reserve raised its inflation forecasts for this year and next year, and reduced the full-year interest rate cut expectation to 1 time. Will the meeting minutes reveal hawkish language enough to support the upward trend of the dollar? Before the meeting minutes, on Tuesday evening, Powell will give a speech at the European Central Bank's annual meeting, which may be more worth paying attention to than the minutes, with European Central Bank President Lagarde also taking the stage.
The Federal Reserve currently expects the full-year interest rate cut forecast to be reduced to 1 time, while the market expects 2 cuts, with the market estimating a 61% chance of a 25 basis point cut in September, but there is still divergence. Federal Reserve official Michelle Bowman stated that there will be no interest rate cuts this year.
Since last week's PCE inflation data did not cause much disturbance in the market, the non-farm employment data on this Friday at 20:30 will attract attention. The market expects an increase of 180,000 jobs, with the previous value being 272,000, the unemployment rate is expected to remain at 4%, and the expected hourly wage growth is expected to drop from 4.1% to 3.9%.Traders believe that better-than-expected employment data will solidify the Federal Reserve's outlook of "one interest rate cut for the whole year," which will be favorable for the US dollar. Conversely, if the data is weak, it will stimulate expectations for higher interest rate cuts and be favorable for the trends of gold and US stocks.
Before the release of non-farm data, this week will also see the release of job vacancy numbers, ADP employment, and initial jobless claims, among other employment-related data. Due to the US Independence Day on July 4th, the initial jobless claims data will be released earlier on Wednesday. Other data for this week includes the ISM manufacturing (Monday 22:00) and service (Wednesday 22:00) PMI, with the latter having a relatively greater impact weight.