Breakfast | U.S. stocks plummet during trading, experiencing the largest intraday reversal since the tariff storm in April

Market Overview

NVIDIA's strong performance was short-lived, with the three major U.S. stock indices experiencing a significant drop during the session. The S&P 500 index fell over 3% from its daily high, marking the largest intraday reversal since the tariff storm in April. The Nasdaq closed down over 2%, and both it and the S&P reached two-month lows; NVIDIA, after rising over 5% during the session, closed down more than 3%, leading the decline among the seven tech giants, with AMD down nearly 8% and Oracle down over 6%; the strong-performing Walmart surged nearly 6% against the trend. The China concept index fell over 3%, with Pinduoduo and Baidu both down over 4%.

After the U.S. non-farm payroll data, U.S. Treasury prices rebounded, and yields turned downward. Following the decline in U.S. stocks, yields accelerated their decline. The U.S. dollar index hit a two-week high during the session but turned down after the U.S. economic data; the yen fell for the fourth consecutive day, reaching a ten-month low; cryptocurrencies continued to plummet, with Bitcoin dropping over 7% at one point, falling below $87,000 for the first time in seven months.

During the Asian session, A-shares and Hong Kong stocks opened high but fell, with the ChiNext index down over 1%. Bank and real estate stocks surged, lithium mining stocks were active, and the tech index fell 0.58%, while new energy vehicles continued to weaken.

Key News

Chinese Commerce Minister Wang Wentao met with U.S. Ambassador to China Nicholas Burns to express concerns over U.S. unilateral tariffs, export controls, bilateral investment restrictions, visa reviews, and restrictive clauses in U.S. trade agreements with third parties, and to discuss the implementation of the results of economic and trade consultations between the two sides.

China's LPR has remained unchanged for six consecutive months: the 5-year LPR is 3.5%, and the 1-year LPR is 3%.

The U.S. added 119,000 jobs in September, significantly exceeding expectations, while the previous two months' job numbers were revised down by 33,000. The unemployment rate unexpectedly rose to 4.4%, reaching a four-year high; "New Federal Reserve Communications": The September employment report does not help resolve internal divisions within the Fed; the number of first-time applicants for unemployment benefits in the U.S. fell unexpectedly to 220,000, the highest number of continuing claims in four years.

Federal Reserve voting member Harker: Rate cuts could prolong high inflation, the current financial environment is "quite loose," and cutting rates now could distort market pricing; this year's voting member Goolsbee: too many rate cuts in the short term, expressing unease about further rate cuts, and not ruling out a dissenting vote in December; Governor Barr warned that inflation remains at 3%, calling for cautious progress on rate cuts.

Trump is reportedly set to sign a new AI policy "Genesis Plan" next Monday, likening it to the "Manhattan Project" and the "Space Race"; reports indicate that the White House is pressuring Congress to block legislation restricting AI chip exports.

Ukraine claims that Zelensky has received a draft U.S. peace plan and will consult with Trump on a solution; crude oil, which rose over 1% during the session, turned down; it was reported that the U.S. and Russia held closed-door talks to finalize a Russia-Ukraine peace plan, which requires Ukraine to give up territory, a claim the Russian side denies as having new developments

Google upgrades its popular image generation model, with the Nano Banana Pro based on Gemini 3 offering "studio-level" precision and control, with images at a maximum resolution of 4K and accurate text rendering in multilingual environments.

Walmart Q3 revenue increased by 5.8% year-on-year, with e-commerce sales growing by 27% as a highlight, marking the second consecutive quarter of raised performance expectations.

NetEase Q3 revenue increased by 8.2% year-on-year, with net profit rising by over 30% year-on-year, and gaming business growth of 11.8%.

Goldman Sachs raises the target price for Zhongji Xuchuang to 762 yuan: 800G is expected to double revenue next year, and the 1.6T technology iteration is expected to bring a new growth cycle.

Market Closing

U.S. and European Stock Markets: The S&P 500 fell by 1.56%, closing at 6538.76 points. The Dow Jones Industrial Average fell by 0.84%, closing at 45752.26 points. The Nasdaq fell by 2.16%, closing at 22078.048 points. The European STOXX 600 index rose by 0.40%, closing at 563.94 points.

A-shares: The Shanghai Composite Index fell by 0.4%, closing at 3931.05 points, the Shenzhen Component Index fell by 0.76%, closing at 12980.82 points, and the ChiNext Index fell by 1.12%, closing at 3042.34 points.

Bond Market: By the end of the bond market, the yield on the U.S. ten-year benchmark Treasury bond was about 4.08%, down about 6 basis points during the day; the yield on the two-year U.S. Treasury bond was about 3.53%, down about 6 basis points during the day.

Commodities: WTI December crude oil futures closed down 0.50%, at $59.14 per barrel; Brent January crude oil futures closed down 0.20%, at $63.38 per barrel. COMEX December gold futures closed down 0.56%, at $4060 per ounce. LME zinc futures closed up about 1.2%, at $3016 per ton. LME nickel futures closed down about 1%, at $14501 per ton.

News Details

Global Highlights

Chinese Commerce Minister Wang Wentao meets with U.S. Ambassador to China Nicholas Burns. Wang Wentao expressed concerns about U.S. unilateral tariffs, export controls, bilateral investment restrictions, visa reviews, and restrictive clauses in U.S. trade agreements with third parties, clarifying China's position on issues such as Anshi Semiconductor, and communicated with the U.S. side on the implementation of the results of bilateral economic and trade consultations. Wang Wentao stated that both China and the U.S. should establish the correct understanding that the two countries must coexist and can achieve win-win outcomes, maintain the China-U.S. economic and trade consultation mechanism, manage uncertainties and instabilities in economic and trade relations, reduce the list of issues, and expand the list of cooperation to inject more stability and certainty into the economies of both countries and the world China's November LPR remains unchanged: the 5-year LPR is 3.5%, and the 1-year LPR is 3%. The LPR has remained "steady" for the sixth consecutive month. Analysts believe that looking ahead, the economic operation is expected to continue its recovery trend before the end of the year, with policy interest rates remaining stable and LPR quotes also expected to remain unchanged.

The U.S. September non-farm payrolls added 119,000 jobs, significantly exceeding expectations, while the unemployment rate unexpectedly rose to 4.4%, reaching a four-year high. The delayed September non-farm report shows conflicting signals in the U.S. job market: the number of new jobs is more than double the expected increase by economists, yet the unemployment rate did not remain flat at 4.3% as expected in August, and the employment figures for the previous two months were significantly revised down by 33,000. The unexpected rise in the labor participation rate pushed up the unemployment rate, full-time employment rebounded, but industries such as manufacturing and transportation continued to cut jobs, and wage growth slowed month-on-month. The reports for October and November will be released together on December 16, meaning the September report is the last employment report the Federal Reserve will see before its meeting on December 9-10, which may complicate December's decision-making.

• “New Federal Reserve News Agency”: September employment report does not help resolve internal divisions within the Federal Reserve. Timiraos believes that the September non-farm employment report further deepened the internal divisions within the Federal Reserve. On one hand, hiring activity rebounded, and job growth exceeded expectations, which may give the inflation-focused "hawks" more confidence in opposing another rate cut. On the other hand, the unemployment rate rose to 4.4%, the highest in four years, and the employment growth data for July and August was also revised down, with August being the second month this year to show a net job decline.

In the U.S., the number of first-time unemployment claims unexpectedly fell to 220,000, while the number of continuing claims for unemployment benefits rose to a four-year high. For the week ending November 15, the number of first-time unemployment claims decreased by 8,000 to 220,000, below the expected 227,000. Although the number of first-time claims remains robust, the number of continuing claims for unemployment benefits slightly increased to 1.974 million, exceeding the expected 1.95 million, reaching the highest level since October 2021.

"Genesis Mission"! Trump reportedly to sign new AI policy next Monday, comparing it to the "Manhattan Project" and the "Space Race". Media reports indicate that Trump plans to launch the "Genesis Mission" at the White House next Monday, which may require national laboratories to undertake more work in emerging AI technologies and may involve public-private partnership mechanisms Trump also called on Congress to pass federal AI regulatory standards, advocating for a unified federal approval process to avoid obstacles caused by fragmented state regulations.

• Jensen Huang impresses Trump? Reports say the White House pressures Congress to block the AI chip export restriction bill. Media reports indicate that key officials from the White House are pressuring Capitol Hill, urging lawmakers to exclude the GAIN AI Act from the annual National Defense Authorization Act. It is reported that as a must-pass defense legislation, if the restrictive provision fails to make it into the final version, its implementation will become highly unlikely. If this move is ultimately realized, it would mean a significant victory for semiconductor giants like NVIDIA in maintaining access to overseas markets.

Federal Reserve voting member Harker: Rate cuts may prolong high inflation, the current financial environment is "quite loose," and cutting rates now could distort market pricing levels. The internal hawk-dove divide within the Federal Reserve reemerges. Cleveland Fed President Harker strongly opposes further rate cuts. She warns that cutting rates to support the labor market may prolong inflation levels above the Fed's target and increase financial stability risks. She believes that the current interest rate level is "almost non-restrictive," and the policy rate is "near neutral," suggesting that further significant rate cuts are unnecessary.

• Federal Reserve voting member Goolsbee: Concerned about excessive rate cuts in the short term, does not rule out voting against cuts in December. Chicago Fed President Goolsbee expressed unease about rate cuts while inflation remains too high and stable, with some indicators even worsening. His unease stems from "pushing too many rate cuts too quickly in the short term and expecting the inflation we see to be temporary." Goolsbee remains concerned about rising inflation in the service sector and is uneasy about the lack of inflation data following the government shutdown, as few unofficial sources can provide reliable price data.
• Federal Reserve Governor Barr warns that inflation is still at 3%, calls for cautious rate cuts. Barr stated that with inflation still a full percentage point above the Fed's target, the Fed must proceed cautiously when considering further rate cuts. He is concerned that inflation remains around 3%.

Ukraine states Zelensky has received the U.S. peace plan draft, will consult with Trump over the phone. The Ukrainian presidential office announced that President Zelensky has officially received the draft of the U.S. peace plan for the Russia-Ukraine conflict. Both sides have reached a consensus to further collaborate on the plan's terms, aiming to achieve a decent resolution to end the conflict. Zelensky is expected to have a detailed phone consultation with Trump soon regarding existing diplomatic possibilities and the core elements for achieving peace

• The US and Russia reportedly held closed-door talks to finalize a peace plan for Ukraine, which requires Ukraine to cede territory; the Russian side denies any new developments. According to reports, this potential agreement formed through direct negotiations between the US and Russia could be completed as early as this week or by the end of the month, with its core terms requiring Ukraine to hand over the entire eastern Donbas region (including key defensive positions currently under the control of Ukrainian forces) to Russia. This plan "barely consulted Ukraine or European allies" and is likely to face strong opposition from the governments in Kyiv and Europe.

NVIDIA conference call: Jensen Huang counters that “what we see is completely opposite to the AI bubble”, with company order visibility reaching $500 billion, and Rubin set to launch in the second half of next year. Jensen Huang attempted to convince Wall Street that the engine of this AI technology revolution is not only still running but is also penetrating into broader fields.

• Goldman Sachs: More important than strong earnings reports, NVIDIA's management addressed three “key questions”. Goldman Sachs' research report pointed out that, first, NVIDIA confirmed the revenue outlook for data centers, with revenue expectations exceeding $500 billion for the 2025/2026 fiscal year and potential upside; second, the next-generation Rubin chip is scheduled to launch in mid-2026 and contribute revenue in the second half of that year; additionally, the older AI GPU represented by the A100 has significantly exceeded customer depreciation expectations in actual usage lifespan.
• Does NVIDIA's performance contradict the AI bubble theory? Analysts say the concern should not be NVIDIA, but the data centers built on debt. Analysts warned that concerns about an AI bubble are not NVIDIA's issue; the real problem lies in companies borrowing heavily to build data centers, as these speculative investments may face liquidation when capacity saturates in two to three years. Strong sales of NVIDIA chips only prove robust infrastructure spending and do not reflect the true maturity of the AI economy; key indicators should focus on the monetization capabilities of AI services from platforms like Microsoft and Adobe, as well as actual customer demand.

Musk and Jensen Huang discuss: AI will make you busier, humanoid robots will become the largest industry in history. AI will not make you unemployed; instead, it will make you busier. After productivity increases, most companies are not working less but are instead facing more backlog of tasks. There are too many things to do, leading to increased busyness. Humanoid robots will become the largest industry or product in history, larger than smartphones or anything else, because everyone will want one, or even multiple. What we are seeing is not a bubble, but a fundamental shift from general computing to accelerated computing Google's popular live image model upgrade, Nano Banana Pro based on Gemini 3 offers "studio-level" precision and control. Nano Banana Pro supports generating images with up to 4K resolution, accurately rendering text in a multilingual environment, allowing users to control shooting angles, depth of field, color, and lighting parameters like using a professional camera, maintaining consistency for up to five characters and fourteen objects. It can convert recipe text into illustrated flowcharts, visualize real-time information such as weather, and change image scenes from day to night. Free users of the Gemini App can use the new model within limits, with live images watermarked. Google also launched a tracing feature that allows users to upload images to the Gemini App to check if they were generated by Google AI.

Leveraged "gamblers" buried, institutional funds retreat, the cryptocurrency market experiences the most severe adjustment since 2017. Prices continue to decline, but leveraged positions remain high. This abnormal combination of "no price rebound, yet increased leverage" is pushing the crypto market into the most dangerous situation since 2017.

Walmart's Q3 revenue increased by 5.8% year-on-year, e-commerce sales grew by 27% as a highlight, and it raised performance expectations for the second consecutive quarter. The financial report shows that Walmart's Q3 e-commerce business became a growth highlight. Global e-commerce sales increased by 27%, with all business segments achieving significant growth. E-commerce sales in the U.S. market grew by 28%, driven by increased store delivery orders and growth in advertising and third-party markets. International e-commerce sales surged by 26%, with Sam's Club growing by 22%.

Netease's Q3 revenue increased by 8.2% year-on-year, net profit increased by over 30% year-on-year, game business grew by 11.8%. The financial report shows that Netease's Q3 revenue from games and value-added services reached 23.3 billion yuan, a year-on-year increase of 11.8%, showing strong performance. The online game "Fantasy Westward Journey" has set a new peak for simultaneous online users for four consecutive quarters, reaching 3.58 million; "Destiny: New Life" topped the iOS download charts in Europe, America, and China; martial arts-themed games like "Yanyun Sixteen Sounds" are entering overseas markets; "World of Warcraft: Titan Reforged" server will go live in November, and "Diablo IV" will be released in China on December 12.

Muddy Waters CEO: Now is not a good time to short large tech stocks. Big short seller Carson Block admitted that in the current market environment, he "would rather go long than short," as shorting large tech stocks like Nvidia would face significant risks However, some smaller AI-related companies are becoming potential short targets for Muddy Waters, especially those riding the AI wave for hype.

Goldman Sachs raises Zhongji Xuchuang target price to 762 yuan: 800G expected to double revenue next year, 1.6T technology iteration expected to bring new growth cycle. Goldman Sachs stated that benefiting from the diversification trend of ASIC chips and the surge in demand for high-speed connections, it expects the company's net profit compound annual growth rate to reach 59% from 2025 to 2028, with 800G optical module revenue expected to surge 104% year-on-year in 2026, and 1.6T optical module revenue expected to skyrocket 110% in 2027. The net profit forecasts for Zhongji Xuchuang for 2026 and 2027 have been raised by 23% and 28%, reaching 21.645 billion and 29.944 billion yuan, respectively.

Domestic Macro

Before the end of the year, Hong Kong stocks face the test of a "unlocking frenzy," nearly 200 billion Hong Kong dollars! From this Wednesday until the end of the year, 28 companies listed in Hong Kong over the past year will face share unlocks. The unlocking wave coincides with a rise in global risk aversion and weakening market momentum, adding pressure to Hong Kong stocks. Although the Hang Seng Index has still risen 29% this year, it is experiencing its largest weekly decline in a month.

Domestic Companies

The first domestic GPU stock is about to go public: issue price 114.28 yuan/share, expected to raise 8 billion yuan. Moore Threads announced that it will start subscription on November 24, with an issue price of 114.28 yuan/share and a total of 70 million shares to be issued. Based on the issue price, the total market value after listing is approximately 53.715 billion yuan. This chip design company, established only five years ago, has achieved technological breakthroughs in AI computing and graphics rendering, with revenue reaching 702 million yuan in the first half of 2025, exceeding the total of the previous three years, and a compound annual growth rate of over 208% in the past three years.

ByteDance remains popular with capital, valuation rises to 480 billion dollars. Today Capital recently acquired a portion of equity from ByteDance's early investor, Bank of China Group Investment Limited, through equity auction at an estimated valuation of about 480 billion dollars, with a transaction amount of 300 million dollars, becoming one of the largest secondary market transactions for the company this year. Insiders said that the bidding process was intense, reflecting the capital market's continued optimism about ByteDance's layout in AI technology and global business expansion.

Lithium carbonate returns to the 100,000 yuan mark, should car companies be worried. Despite the sharp price increases upstream, car companies remain collectively silent, due to the fact that global lithium carbonate supply is still oversupplied by 200,000 tons, idle capacity such as lithium extraction from mica may resume production, and companies like CATL have formed a firewall through integrated layouts, while the sustainability of demand driven by energy storage remains questionable This round of price increases mainly affects mid-to-high-end models, while the average price of new energy vehicles continues to decline to 156,000 yuan. The industry reshuffle is accelerating, urgently needing to shift from a price war to a value war.

• What’s next for lithium carbonate? Goldman Sachs: Prices may fluctuate within a range until mid-next year when supply and demand tighten. Goldman Sachs' research found that China's lithium chemical inventory continues to decline at a rate of about 4,000 tons per week. The production resumption progress of CATL's Yichun lithium mine is not meeting expectations, further exacerbating market concerns about short-term supply. Despite a positive demand outlook and continuous inventory decline, if prices rise, African supply is expected to increase further. Prices are likely to remain in a range until mid-2026, with the market tightening due to limited domestic supply in China and strong demand, with an average lithium carbonate price expected to be $8,900 per ton in 2026.

Overseas Macro

U.S. October existing home sales hit an eight-month high, mortgage rates drop boosting demand. U.S. existing home sales totaled an annualized 4.1 million units in October, expected at 4.08 million units, and the previous value was 4.06 million units. Existing home sales in October increased by 1.2% month-on-month, expected to rise by 0.5%, with the previous value being an increase of 1.5%. The median home price in October rose by 2.1% year-on-year to $415,200, continuing the year-on-year increase since mid-2023.

Japan's stocks, bonds, and currency face "three consecutive kills": "High City Sown Rice" trading is gone, "Sell Japan" trading has just begun. Reports indicate that Japan's fiscal stimulus plan is expected to be 21.3 trillion yen, and if private sector investment is included, the total scale could reach 42.8 trillion yen. Previously, the market was concerned that the scale of the stimulus plan was too large, coupled with the abolition of the budget balance target by High City and the triggering of diplomatic disputes, which raised doubts about policy credibility. Analysts warn that a crisis similar to the UK's Truss may be repeated, and the "Sell Japan" trade may have just begun.

The Japanese version of the "Truss Shock" may unfold, with the supply-demand imbalance of ultra-long bonds not fully priced in. Nomura Securities warns that the overall weakening of the yen combined with the weakness of ultra-long bonds is a clear signal for investors to sell Japanese bonds. As long as concerns about the Japanese version of the "Truss Shock" persist, foreign investors will continue to avoid the Japanese market. The steepening of the yield curve driven by fiscal concerns has not fully reflected the extent of the deterioration in supply and demand for ultra-long bonds during April-May. Currently, the supply-demand premium indicator for 30-year government bonds is 48 basis points, lower than the peak of 67 basis points in April-May, but still has the potential for significant expansion.

Overseas Companies

Private credit faces another blow! BlackRock "rarely" waives management fees as its private credit fund performs poorly A private credit collateralized loan obligation (CLO) under BlackRock has failed multiple key tests due to deteriorating asset quality, with several loans held by the CLO experiencing serious issues. Previously, the credit market faced multiple defaults, leading to the collapse of subprime auto loan company Tricolor Holdings and auto parts supplier First Brands Group.

After analyzing OpenAI's AI demand, Barclays concluded: The AI capital expenditure cycle will continue, with technological breakthroughs potentially triggering a surge in computing demand in 2027/28. Barclays' report shows that OpenAI's performance continues to exceed expectations, confirming that the AI capital expenditure cycle will persist in the medium to long term. Performance growth directly drives the company's computing investment, with continuous model iterations pushing up computing demand, forcing computing partners to accelerate infrastructure deployment. The years 2027-2028 are expected to be a key landing window for achieving "recursive self-improvement," further increasing computing demand.

Betting on the "AI memory supercycle," SK Hynix plans to increase 10nm DRAM production to 8 times next year. According to reports, SK Hynix is betting on the AI inference application market and plans to increase its monthly production capacity of sixth-generation 10nm DRAM from 20,000 wafers to 160,000-190,000 wafers next year, an increase of 8-9 times, accounting for more than one-third of total capacity. As AI applications shift from training to inference, demand for general DRAM has surged, with tech giants like NVIDIA adopting it. Industry insiders expect SK Hynix's facility investment to easily exceed 30 trillion won next year, demonstrating strong confidence in the "AI memory supercycle."

Learning from history, how much impact do memory price increases have on the smartphone industry? Mid-range and low-end models are the most affected, while high-end models are relatively safe: For high-end models like the Apple iPhone 17 Pro Max, memory accounts for only 4% of ASP, having minimal impact from price increases. For high-end Android models like the Xiaomi 17 Pro, memory accounts for 7%, with relatively small impact. However, mid-range and low-end Android models like Redmi have memory accounting for over 10% of ASP, becoming the hardest hit by price increases.

Crypto giant Kraken secretly submits IPO application, seizing the last window before the 2026 midterm elections. Following the listings of Circle and Gemini, the established cryptocurrency exchange Kraken has secretly filed to seek a listing in the first quarter of 2026. With the strong policy support for digital assets shown by the Trump administration, Kraken is attempting to seize the last window before the 2026 midterm elections.

Today's News Preview

U.S., Eurozone, U.K., and Japan's November Manufacturing, Services, and Composite PMI.

U.S. November University of Michigan Consumer Sentiment and Inflation Expectations.

Japan's October CPI.

Federal Reserve Vice Chair Jefferson, New York Fed President Williams, Fed Governor Barr, and Dallas Fed President Logan will give speeches.

European Central Bank President Lagarde will give a speech.

Huawei may release breakthrough technology in the AI field.

Hang Seng Index Company announces third-quarter review results