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Market Overview

U.S. small-cap stocks rose while the S&P and Dow Jones fell away from new highs. ASML's earnings report was a bombshell, dragging down the chip index by more than 5% and also pulling the broader U.S. stock market lower. The New York Fed's manufacturing index for October unexpectedly fell into contraction, reaching a five-month low.

ASML's U.S. stock plummeted 16%, marking the largest drop since March 2020, while European stocks fell over 15%, the worst since 1998. Nvidia's stock retreated from the record closing high it set yesterday, falling as much as 6.8%. KLA Corp. fell 15%, the worst in a decade. AMD dropped over 5%. Apple announced a new iPad Mini with AI support, which briefly rose by 2.7%, setting a new intraday high. U.S. bank stocks reported earnings, with Goldman Sachs rising over 3% to a new intraday high before closing lower, while Citigroup opened higher and then turned lower, falling over 5%. After luxury giant LVMH reported earnings, U.S. stocks briefly fell by 10%, reaching a two-year low.

Chinese concept stocks fell nearly 6%. JD.com and Ctrip fell about 9%, while Pinduoduo fell nearly 6%. The offshore yuan fell 400 points, breaking through 7.13 yuan.

There are reports that Israel will not strike Iranian oil facilities. The International Energy Agency (IEA) monthly report warns that ample supply offsets geopolitical risks, causing oil prices to plummet, falling more than 5% at one point, which weakened inflation expectations. Coupled with safe-haven sentiment, U.S. Treasuries rose, with the 10-year U.S. Treasury yield falling nearly 7 basis points. Safe-haven asset gold rose. Bitcoin broke through $67,000.

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In the Asian session, both stocks and currencies fell, with the Shanghai Composite Index closing down by more than 2%, the Hang Seng Tech Index in Hong Kong fell nearly 5%, the offshore yuan fell over 350 points, and government bond futures closed higher across the board.

News Highlights

ASML's performance was a bombshell, with orders only half of market expectations, and the company lowered its sales target for next year, causing its stock price to plummet 17%. The company stated that demand for AI chips has indeed surged, but other parts of the semiconductor market are weaker than expected.

The United States is reportedly considering restricting exports of AI chips from Nvidia, AMD, and others to Middle Eastern countries.Goldman Sachs' Q3 profits surge by 45%, with stock trading revenue hitting a three-year high. Bank of America's Q3 earnings exceed expectations, driven by strong investment banking and trading operations, although net interest income declines by 2.9% year-over-year. Citigroup experiences growth across all business lines in Q3, with market business revenue at its best in a decade and investment banking income soaring by 31%.

Luxury giant LVMH's key performance metrics miss expectations, with quarterly revenue falling for the first time since the pandemic, at one point plunging by 10%.

The New York Fed's manufacturing index for October stands at -11.9, marking a five-month low and a sharper-than-expected decline!

Market Wrap-Up:

U.S. Stocks: The Dow Jones Industrial Average falls by 0.75%, the S&P 500 Index declines by 0.76%, and the Nasdaq Composite drops by 1.01%.

European Stocks: The STOXX 600 Index closes 0.80% lower. The German DAX 30 Index closes 0.11% down. The French CAC 40 Index closes 1.05% lower. The UK's FTSE 100 Index closes 0.52% down.

Chinese Stocks: The Shanghai Composite Index falls by 2.53%, the Shenzhen Component Index declines by 2.53%, and the ChiNext Index drops by 3.22%.

Bond Market: The yield on the 10-year U.S. Treasury note falls by 6.86 basis points, to 4.0317%. The yield on the two-year U.S. Treasury note declines by 1 basis point, to 3.9454%.

Commodities: WTI crude oil futures fall by 3.81%, to $71.02 per barrel. Brent crude oil futures drop by 3.59%, to $74.68. COMEX gold futures rise by 0.52%, to $2,679.50 per ounce. COMEX silver futures increase by 0.18%, to $31.685 per ounce. COMEX copper futures fall by 1.42%, to $4.3435 per pound.Breaking News Details

Global Highlights

ASML's performance bombs, with orders at only half of market expectations, lowering sales targets for next year, and shares plummet by 17%.

According to financial reports, ASML's orders in the third quarter were only €2.63 billion, a sequential decrease of 53%, while also lowering the revenue and gross margin expectations for 2025. The company stated that there is indeed a surge in demand for AI chips, but other parts of the semiconductor market are weaker than expected, leading to logic chip manufacturers postponing orders. The poor performance led to ASML's ADR falling by more than 17% in the US stock market, and a 16% drop in the Dutch market, marking the largest since 1998. ASML's plummet also dragged down the Philadelphia Semiconductor Index and a host of chip stocks such as Nvidia.

The United States is reportedly considering restricting exports of AI chips to Middle Eastern countries by Nvidia, AMD, and others. According to Pengpai News, it is believed that in the last few months of Biden's term, it may be difficult to introduce comprehensive new policies, and such rules may be challenging to enforce. Prior to this, the United States has already restricted companies like Nvidia and AMD from exporting AI chips to over 40 countries in the Middle East, Africa, and Asia.

Goldman Sachs' Q3 profits soar by 45%, with stock trading business revenue at its best in three years. Bank of America's Q3 earnings exceed expectations, with strong investment banking and trading businesses, and net interest income down 2.9% year-over-year. Citigroup's Q3 business grows across the board, with market business revenue at its best in a decade, and investment banking income surges by 31%.

Due to unexpected growth in trading business and the recovery of investment banking, Goldman Sachs' Q3 profits soared by 45%, with both revenue and net interest income exceeding expectations. Goldman Sachs' stock rose by more than 3% before the market opened and closed slightly down.

Bank of America's Q3 net interest income was higher than in Q2, indicating that the trend of this key indicator is improving.

Citigroup's Q3 net profit decreased by nearly 9% year-over-year, and EPS decreased by more than 7%, due to an increase of $1.9 billion, or more than 9%, in loan loss provisions for the quarter. After the financial report was released, Citigroup's stock initially rose by nearly 2%, but after following the overall US stock market downturn, it closed down by more than 5%.Luxury giant LVMH's main performance metrics all missed expectations, with quarterly revenue experiencing its first decline since the pandemic, plunging as much as 10% at one point. The world's largest luxury goods group, LVMH, reported on Tuesday that all major divisions underperformed analysts' expectations in the third quarter, marking the first drop in quarterly revenue since the pandemic. The company's American Depositary Receipts (ADRs) plummeted by 10% on Tuesday. The company stated that the poor third-quarter performance was mainly due to the strengthening yen, which led to a slowdown in growth in the Japanese market.

The October New York Fed Manufacturing Index fell to -11.9, reaching a five-month low with a sharper-than-expected decline!

Overseas Macro

Federal Reserve: U.S. consumers' long-term inflation expectations rise, and expectations of debt delinquency reach the highest level since the pandemic. According to the latest survey by the New York Fed, in September, consumers' long-term inflation expectations climbed, but remained relatively stable; the expected average probability of voluntary resignations over the next 12 months increased from 19.1% to 20.4%, with most labor market-related surveys remaining stable; however, U.S. households' expectations of potential debt delinquency rose to the highest level since April 2020, during the early difficult period of the COVID-19 pandemic.

Goldman Sachs' fund flow experts loudly declared that the U.S. stock sell-off has been "canceled," with the S&P far exceeding 6,000 points by the end of the year. Since 1928, the average return rate of the S&P 500 from October 15th to December 31st is 5.17%, and if it is an election year, the average return of the S&P over these two and a half months reaches 7.04%. Based on Monday's closing price, the S&P could rise to 6,270 points by the end of the year. The U.S. stock market is entering a positive trading environment: after October 25th, the largest buyers of U.S. stocks, public companies, "unfreeze" their repurchases; before Halloween, the largest sellers of U.S. stocks, mutual funds, gradually exit, with over $1.8 trillion in mutual funds ending their fiscal year at the end of October.

"Reflation" becomes the new core narrative, Goldman Sachs: Global asset allocation needs to be adjusted, favoring growth pricing. Goldman Sachs believes that in a "reflation" environment, the market may prefer assets that can benefit from economic recovery and rising inflation. Goldman Sachs is optimistic about the returns of risk assets in the coming year, suggesting that investors should increase their investment in stocks and credit in the short term.

The largest retail industry organization warns of a slowdown in U.S. consumer spending growth during the year-end holiday season. Although the National Retail Federation expects the total spending during the upcoming holiday shopping season to reach a new high, persistent high inflation continues to erode consumers' purchasing power, and the growth rate of sales during this year's most important holiday season will be lower than last year. The cautious sentiment of household spending can be seen in the Halloween consumption survey, which may show the first year-on-year decline since 2020.

The yen has fallen for two consecutive weeks, approaching the 150 mark, and Japan may have to intervene again? Some believe that the government will not intervene unless the yen falls below 160. Deputy Minister of Finance of Japan, Jun Mimura, stated that he is closely monitoring the动向 of the foreign exchange market, including speculative trends. As Japanese Prime Minister Shigeru Ishihara supports loose monetary policy, and expectations for the Federal Reserve's interest rate cuts are also suppressed by CPI data, the yen still faces downward pressure.

Several central banks rarely speak out in support of increasing gold reserves. Officials responsible for foreign exchange reserves at the central banks of Mexico, Mongolia, and the Czech Republic collectively stated that the proportion of gold in their countries' foreign exchange reserves is more likely to increase in the coming years.

Middle East tensions ease, coupled with IEA warning of oversupply, oil prices plummet 5%, and long-term U.S. Treasury bonds rise. There are reports that Israel will not attack Iranian oil facilities, coupled with the International Energy Agency (IEA) warning of an oversupply of oil in its latest monthly report, oil prices fell more than 5% during the session. The sharp drop in oil prices has somewhat reduced market expectations for a resurgence of inflation, pushing U.S. Treasury bonds to rise that day, with the 10-year U.S. Treasury yield falling nearly 7 basis points.Overseas Companies

Apollo CEO: The Good Fortune of the Global Asset Management Industry Over the Past 15 Years Has Come to an End; Four Huge Opportunities Must Be Seized in the Future. Marc Rowan stated that over the past 15 years, Apollo's managed assets have grown by 16 to 17 times, actually surpassing Apple and Microsoft. However, the good fortune of the past 15 years has come to an end, and four huge opportunities must be seized in the future—global industrial revival, significant capital needs of large global companies, substantial demand for fixed income in the retirement market, and rethinking public and private markets.