ADDX GO Market Morning Wrap - 21st Aug
Stock Market
On Wednesday Eastern Time, the major U.S. stock indices closed with mixed results, as investors continued to offload tech stocks in favor of relatively undervalued sectors. Meanwhile, the market awaits Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole symposium.
Tech stocks have been a key driver in Wall Street’s rebound since the April sell-off but have recently experienced consecutive pullbacks.
Allspring senior portfolio manager Bryant van Cronkhite remarked: “From a broader perspective, this looks more like a rotation than a true sell-off. First, tech stock valuations currently appear stretched. Second, there are still many overlooked sectors with highly attractive valuations.”
Most large-cap tech stocks declined, with Intel dropping about 7%, and Google, Amazon, Apple, and Tesla falling over 1%. Microsoft, Nvidia, Netflix, Meta, and AMD saw modest declines. Building materials supplier James Hardie Industries Plc. (JHX) plummeted over 34%, marking its largest drop since 1973.
Analysts point to additional reasons for the tech pullback, including OpenAI CEO Sam Altman’s recent claim that AI-related stocks are in a “bubble,” and a MIT study showing many tech firms struggle to convert AI investments into actual profits.
Some investors also worry about Trump administration interference in private enterprises.
The administration is considering stakes in semiconductor firms like Intel and has already secured unprecedented revenue-sharing deals with Nvidia and AMD.
The Fed’s July meeting minutes, released that day, revealed that only two officials (favoring a rate cut) voted against maintaining the benchmark rate, lacking public support from peers.
Fed policymakers assessed that higher tariffs are already reflected in some goods prices, but their full impact on the economy and inflation remains under observation. Looking ahead, officials noted a “dilemma” if inflation remains high while the labor market deteriorates further.
TradeStation analyst David Russell noted that the minutes align with Powell’s hawkish press conference stance. “Bulls might get a cold shower at Jackson Hole.”
The Jackson Hole central bankers’ symposium is set to begin, with Powell’s speech drawing close attention for policy signals. The market has priced in a 25-basis-point rate cut by September.
Miller Tabak analyst Matt Maley said he’ll watch whether the tech pullback is a minor blip or the start of a broader decline. “We need to see more follow-through selling to sound the alarm. If the tech sector, or the entire market, starts a significant downturn, investor sentiment could turn very nervous.”
Meanwhile, investors are also monitoring Trump’s call for Fed Governor Lisa Cook to resign, citing alleged mortgage fraud.
Global Hotspots
Medvedev: Russia Rejects NATO ‘Peacekeeping’ Troops in Ukraine
According News, on August 20 local time, Russian Security Council Deputy Chairman Dmitry Medvedev stated that Russia rejects any NATO troops stationed in Ukraine under the guise of “peacekeeping.”
Fed Minutes: Most See Inflation Risk Outweighing Employment Risk
The Fed’s latest July monetary policy minutes show most members view inflation risk as greater than employment risk, with some noting current rates may not be far above neutral. Many highlighted that tariff impacts may take time to fully emerge, with some expecting businesses to pass costs to consumers.
Concerns were raised about high asset valuations, and several emphasized that prolonged inflation above 2%, especially with high tariffs, increases the risk of unanchored inflation expectations.
Belgian Telecom Operator Hit by Cyberattack, 850,000 Customer Records Accessed
On August 20 local time, Belgian telecom operator Orange disclosed a cyberattack in late July, with 850,000 customer accounts’ data—names, phone numbers, SIM details, PUK codes, and plans—accessed without authorization.
The company said critical data like passwords, emails, or financial information was not compromised. Orange has reported the incident to authorities and filed a formal complaint.
Lagarde: U.S. Tariffs Drag on Eurozone Growth
ECB President Christine Lagarde said on August 20 at the World Economic Forum’s International Business Council that U.S. tariff policies will slow eurozone growth in Q3. She noted a challenging global economy, with the eurozone showing resilience despite distortions from high tariffs. Earlier this year, importers front-loaded inventory to avoid tariff hikes, boosting trade and investment activity.
Company News
Google Launches Pixel 10 Series: AI-Powered, Taking on Apple
Google unveiled a range of new consumer hardware on August 20, including multiple smartphones, watches, and wireless earbuds, showcasing its latest AI advancements. The lineup includes Pixel 10 ($799), Pixel 10 Pro ($999), Pixel 10 Pro XL ($1,199), and Pixel 10 Pro Fold ($1,799).
Pixel Watch 4 costs $349.99 (41mm) and $399.99 (45mm), while the entry-level Pixel Buds 2a is priced at $129. Prices are mostly unchanged from last generation, except for the XL’s doubled storage.
Google deeply integrated its Gemini AI assistant across the lineup, signaling renewed confidence after trailing OpenAI’s ChatGPT.
OpenAI Hits $1B Monthly Revenue, CFO Admits Ongoing Compute Shortage
OpenAI CFO Sarah Friar said on Wednesday that despite revenue milestones, the company faces persistent AI compute shortages. “Demand for GPUs and compute is incredibly high,” she told interviewers.
“Our biggest challenge is always being compute-constrained, which is why we’re rolling out ‘Stargate’ and scaling infrastructure.” Friar noted OpenAI achieved $1 billion in monthly revenue in July.
NFL Expands AI Partnership with Microsoft
The National Football League (NFL) and Microsoft announced on August 20 an extended multi-year strategic partnership, using Microsoft Copilot and Azure AI to enhance sideline assessments, talent scouting, and operational efficiency at venues.
Forex & Commodities
International crude oil futures settled up over 1%.
WTI September crude rose 1.38% to $63.21/barrel; Brent October crude gained 1.6% to $66.84/barrel.
COMEX gold futures rose 0.99% to $3,391.9/oz; COMEX silver futures climbed 1.49% to $37.89/oz.
At New York’s close, the dollar index fell 0.03% to 98.25, with most non-U.S. currencies declining.
Key Events
Russian Deputy PM: Russia Sees Potential to Export LNG to India
Russian First Deputy PM Denis Manturov said at the Russia-India Intergovernmental Commission meeting that Russia continues supplying oil, coal, and petroleum products to India, seeing potential for LNG exports. Beyond direct supplies, both nations are pursuing joint oil and gas projects.
Manturov highlighted deepening peaceful nuclear cooperation based on the Kudankulam plant’s success and sharing aerospace expertise, including rocket engines and navigation systems.
He noted over 90% of Russia-India trade is now settled in local currencies, with stability as a key goal, and trade volume has grown nearly sixfold in five years, making India one of Russia’s top three partners.
U.S. Soybean Association Urges Early China Deal to Ease Farmer Crisis
According to Xinhua, U.S. Soybean Association Chair Caleb Ragland wrote to President Trump on August 19, warning of severe financial strain on soybean farmers as harvest nears.
He urged prioritizing soybeans in U.S.-China trade talks, noting falling prices and rising costs. Historically, 28% of U.S. soybean production went to China (60% of exports) over seven years pre-2018.
In the 2023-2024 marketing year (Sept 1, 2023–Aug 31, 2024), U.S. exports to China hit nearly 25 million metric tons, far exceeding the 4.9 million tons to the EU.
Cryptocurrency
Major digital assets rose Wednesday.
Bitcoin rose 0.9% to $114,213, with 24-hour trading volume down 1.6% to $70.35 billion.
Ethereum (ETH-USD) climbed 4.6% to $4,341.
XRP (XRP-USD) rose 2.3%, BNB (BNB-USD) added 4.1%, and Solana (SOL-USD) gained 5.2%.
Dogecoin (DOGE-USD) rose 3.8%, and Cardano (ADA-USD) added 3.8%.
The total market value of the cryptocurrency industry rose 1.5% in the past 24 hours to $3.88 trillion, with trading volume up 1.1% to $188.37 billion.
Key Events
Goldman Sachs: Stablecoin Gold Rush Just Beginning, Market Could Reach Trillions
Goldman Sachs’ research report states we’re at the start of a stablecoin gold rush. Analyst Will Nance wrote: “We believe USDC (Circle’s stablecoin) will benefit from market share growth on Binance and beyond, with legislative progress legitimizing the ecosystem, expanding the crypto space, and potentially accelerating it through regulation.”
