Wall Street Briefing (August 29): US stocks retreated on Friday, with small-cap stocks and AI hardware leading the decline; gold and Bitcoin plunged; Waller signaled a hawkish stance, causing a partial cooling in risk appetite.

Summary: US stocks edged lower on Friday. The S&P 500 fell 0.25%, the Nasdaq dropped 0.52%, the Dow Jones slipped 0.02%, and the Russell 2000 declined 1.39%. The Dow remained nearly flat, while small-cap stocks clearly led the losses. The VIX fell 0.55% to 14.43, indicating that the equity adjustment did not trigger significant panic. Fed Chair Waller kept the option of rate hikes open at Jackson Hole, with rising interest rate expectations weighing on tech and small-cap stocks. Communication services and consumer discretionary sectors showed relative strength, while AI hardware, gold miners, and cryptocurrency-related stocks led the declines. In major asset classes, the 10-year US Treasury yield rose 1.03% to 4.72%; gold fell 3.18% to $4,454.43; crude oil dipped 0.12% to $83.44; Bitcoin dropped 3.17% to $77,758.68; and the US Dollar Index gained 0.55% to 99.68.

I. Major Events

1. Waller's Jackson Hole speech keeps the option of rate hikes open

Fed Chair Waller stated at Jackson Hole that inflation remains above the 2% target, with limited improvement over the past two years, and the broader financial environment cannot be described as tight. If inflation does not decline clearly and quickly enough, the Fed will still need to take action. Market expectations for policy easing subsequently cooled, while expectations for rate hikes rapidly intensified. US Treasury yields and the US dollar rose, putting pressure on gold, Bitcoin, and stocks more sensitive to financing costs.

2. NVIDIA suspends certain AI cloud computing financing arrangements

Citing insiders, The Wall Street Journal reported that NVIDIA has suspended certain financing arrangements for AI cloud computing companies due to disagreements over customer restriction clauses. As AI infrastructure expands rapidly, the risks borne by chip manufacturers in providing customer financing are coming under scrutiny. The adjustment in financing arrangements has cooled the post-earnings buying frenzy, and investors are beginning to reassess the funding conditions required for the continued expansion of AI capital expenditure.

II. Major Trends

All four major indices retreated slightly on Friday, but with significant internal divergence. The Dow Jones Industrial Average closed nearly flat, while the S&P 500 and Nasdaq declined moderately, and the Russell 2000 fell more than 1%. As interest rate expectations intensified, pressure primarily weighed on small-cap stocks and the Nasdaq, leaving the Dow relatively stable.

Over the past two weeks, SPY fell 0.90%, QQQ dropped 2.00%, DIA declined 0.24%, and IWM slid 3.06%. The Dow proved most resilient, while small-caps and tech stocks experienced deeper corrections. Looking at the three-month horizon, DIA rose 5.93%, SPY gained 2.22%, IWM advanced 1.51%, and QQQ fell 2.50%. The medium-term structure remains led by the Dow, while the Nasdaq has yet to shake off its weakness.

Over the past two weeks, MAGS rose 1.19%, while SPY fell 0.90% and the equal-weight S&P 500 (RSP) dropped 0.93%, indicating a short-term performance shift back toward mega-cap tech. Value stocks (SPYV) fell 0.36% during the same period, compared to a 1.36% decline for growth stocks (SPYG), showing that value continues to outperform growth in terms of stability.

III. Market Sentiment

The VIX dropped 0.55% to 14.43, and the CNN Fear & Greed Index eased from 55 to 54, remaining in neutral territory. The pullback in equity indices did not trigger significant panic selling; however, small-cap stocks, semiconductors, and crypto-related concepts saw deeper declines, suggesting a localized cooling in risk appetite.

The CBOE index option Put/Call ratio stood at 0.99, the equity option Put/Call ratio at 0.75, and the total Put/Call ratio at 0.85. Demand for protection in index options is near equilibrium, while individual stock options still lean toward bullish positioning. Caution in the options market is lower than what is reflected in the price action of small-cap stocks and cryptocurrencies.

4. Market Scan

1. Index ETFs

The S&P 500 (SPY) fell 0.23%, the Nasdaq-100 (QQQ) dropped 0.65%, the Dow Jones (DIA) slipped 0.03%, and the Russell 2000 (IWM) declined 1.35%. The Dow essentially held its prior close, while tech heavyweights dragged down the Nasdaq, and small-caps showed greater sensitivity to rising rate expectations. The four major indices did not fall in unison; pressure was concentrated mainly in growth and small-cap segments.

2. Sector Performance

$The Communication Services Select Sector SPDR® Fund (XLC.US)$ rose 1.42%, $Consumer Discretionary Select Sector SPDR Fund (XLY.US)$ gained 1.15%, making them the two strongest performers among the 11 sectors. $The Technology Select Sector SPDR® Fund (XLK.US)$ fell 1.55%, $Utilities Select Sector SPDR Fund (XLU.US)$ dropped 1.04%. Rising interest rate expectations simultaneously pressured high-valuation tech stocks and high-dividend assets, preventing capital from spreading broadly across the market.

From the perspective of sub-sectors, $Ishares Trust U.S. Medical Devices Etf (IHI.US)$ Rose 1.04%, one of the few sectors showing strength against the trend. $Global X Uranium ETF (URA.US)$ Fell 5.79%, $VanEck Gold Miners Equity ETF (GDX.US)$ Fell 3.90%, $SPDR S&P Biotech ETF (XBI.US)$ Fell 3.48%, $VanEck Semiconductor ETF (SMH.US)$ Fell 3.47%; $First Trust Exch Traded Fund 2 Nasdaq Cybersecurity Etf (CIBR.US)$ DRAM storage also dropped more than 1.5%. Gold's decline dragged down gold miners, while rising interest rates and a stronger US dollar weighed on growth and resource-themed stocks. Optical communication-related stocks saw particularly sharp declines; storage stocks were relatively resilient, but still broadly lower across the board.

3. The Magnificent Seven Tech Stocks

MAGS rose 0.69%, with most large-cap tech stocks gaining. Netflix rose 2.35%, Microsoft rose 1.68%, Apple rose 1.63%, Google rose 1.53%, and Meta rose 1.21%; NVIDIA fell 4.57%, and Tesla fell 1.71%. After surging the day after its earnings report, NVIDIA gave back significant gains, as suspended financing arrangements sparked new concerns and rising interest rates prompted profit-taking. Other large-cap tech stocks provided support, preventing a deeper correction in the Nasdaq.

4. Chinese ADRs

$KraneShares CSI China Internet ETF (KWEB.US)$ Rose 0.84%, showing mild overall strength. $Alibaba (BABA.US)$ Rose 2.23%, $PDD Holdings (PDD.US)$ Rose 1.18%, $JD.com (JD.US)$ Up 0.88%; $Tencent Music (TME.US)$ Down 1.15%, $Bilibili (BILI.US)$ Down 0.98%. Chinese concept stocks lacked a unified catalyst, with market performance driven more by individual stock divergence; Alibaba served as the primary support.

5. Cryptocurrencies

Bitcoin fell 3.17% to $77,758.68. Speeches by Fed officials pushed up interest rates and the US dollar, leading to concentrated profit-taking in crypto assets after their recent rebound. Losses in cryptocurrency-related stocks widened further, $MARA Holdings (MARA.US)$ Down 10.11%, $Riot Platforms (RIOT.US)$ Down 9.05%, $Circle (CRCL.US)$ Down 7.53%, $Strategy (MSTR.US)$ Down 7.34%, $Coinbase (COIN.US)$ Down 6.33%, with Robinhood down 5.01%.

$S&P 500 Index (.SPX.US)$ $SPDR S&P 500 ETF (SPY.US)$ $Invesco Exchange Traded Fd Tr S&P 500 Equal Weight Etf (RSP.US)$ $NASDAQ 100 Index (.NDX.US)$ $Invesco QQQ Trust (QQQ.US)$ $Dow Jones Industrial Average (.DJI.US)$ $State Street® SPDR® Dow Jones Industrial Average® ETF Trust (DIA.US)$ $Russell 2000 Index (.RUT.US)$ $iShares Russell 2000 ETF (IWM.US)$ $Roundhill Magnificent Seven ETF (MAGS.US)$ $USD (USDindex.FX)$ $U.S. 10-Year Treasury Notes Yield (US10Y.BD)$ $iShares 20+ Year Treasury Bond ETF (TLT.US)$ $XAU/USD (XAUUSD.CFD)$ $SPDR Gold ETF (GLD.US)$ $CBOE Volatility S&P 500 Index (.VIX.US)$ $CME-Bitcoin RR Futures (SEP6) (BTCmain.US)$ $iShares Ethereum Trust ETF (ETHA.US)$ $NVIDIA (NVDA.US)$ $Tesla (TSLA.US)$ $Meta Platforms (META.US)$ $Amazon (AMZN.US)$ $Alphabet-C (GOOG.US)$ $Microsoft (MSFT.US)$ $Apple (AAPL.US)$

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