Wall Street Morning Briefing: Besant's 'Market Rescue' Lasts Only One Day, All Three Major Indices Decline, Walmart's Plunge, AI Storage and Optical Communication Break Through

Every Monday to Friday morning, we focus on macroeconomics, US stocks, AI, precious metals, and crude oil, using data to review the market and trends to seize opportunities, produced by PANews.

Long-term Interest Rates Decouple, Market Begins Trading "Bad 4.70%"

All three major US stock indices closed lower, with the S&P 500 down 0.87%, the Nasdaq Composite down 1.00%, and the Dow Jones Industrial Average plunging 1.32%. The VIX fear index rose 7.52% to 16.01, with market breadth deteriorating, as only about one-third of S&P component stocks rose.

The US Treasury's expansion of long-term bond buybacks as a "calming trade" lasted less than 24 hours, as the market quickly realized that buybacks can improve liquidity but cannot suppress deficits, inflation, and bond supply. The yield on the 10-year US Treasury returned to around 4.70%, while the 30-year yield returned to about 5.25%, essentially erasing the gains from the buybacks.

On Wednesday, the US Treasury announced that the scale of long-term government bond buybacks would "at least double," leading to a noticeable drop in the 30-year yield that day. On Thursday, Besant continued to ramp up on CNBC, stating that a single buyback could exceed $4 billion, "We have a huge toolbox," and previewed a fiscal consolidation plan to be announced this weekend or early next week.

J.P. Morgan strategists Jay Barry and Jason Hunter bluntly stated that the Treasury's market operations are a temporary fix, maintaining a nearly 6% fiscal deficit in an economy close to full employment. Without implementing real fiscal consolidation, any technical buyback will be seen by the market as lacking credibility, even becoming a "desperate attempt to lower yields." Evercore ISI's Sarah Bianchi also believes that the government will find it difficult to introduce measures that can genuinely reduce the deficit in the short term, so the boost from buybacks to the market will be short-lived.

Trump announced the launch of "Economic D-Day" and an "unprecedented scale of economic warfare" against Iran. Besant revealed that a press conference would be held on August 24 to explain the action plan, threatening "the most severe" sanctions and "unprecedented economic isolation," urging allies to "either stand together or be enemies." He hinted that maximum economic pressure could reduce the probability of military conflict while expressing "not understanding" the surge in oil prices on Thursday, stating that the actions would drive oil prices down.

Energy markets saw five consecutive days of gains, with WTI crude oil October contracts rising about 2.5% to $86.83, and Brent rising 2.4% to $93.78, both reaching nearly one-month highs. UBS analyst Giovanni Staunovo pointed out that tensions in the Middle East remain high, and there is still potential for supply disruptions.

COMEX gold futures closed up 0.71% at about $4577 per ounce, with spot prices breaking through $4550 during the day and reaching the 200-day moving average, technically seen as a strong bullish signal; silver futures surged 3.56% to about $68. From the traders' perspective, gold refused to continue falling when the 10-year yield returned to around 4.70%, starting to trade on "bad yield increases": oil prices, inflation risks, $40 trillion in debt, and AI financing collectively pushing up term premiums, rather than prosperity pricing, with gold's true rival becoming US Treasuries themselves.

The US dollar index rose slightly by 0.07% to about 98.869, initially dropping due to Besant's speech before a V-shaped reversal. Besant reiterated the strong dollar policy, stating that the dollar is returning to levels from two months ago. However, Citigroup has lowered its three-month dollar index forecast from 102.12 to 98.34, citing that the market is re-pricing the more dovish Federal Reserve and uncertainties regarding fiscal intervention.

Storage Chips Break Through Despite Adversity, Walmart's Plunge Drags Down Consumer Sector

Last night, the direct trigger that weighed down the Dow was Walmart, a bellwether for US consumption, with Walmart's same-store sales in the US growing only 2.6%, below the market expectation of 3.8%, marking the lowest growth in over six years and slowing for the second consecutive quarter. Despite revenue and adjusted EPS exceeding expectations and raising some full-year guidance, the full-year EPS guidance fell short of market expectations, leading to a stock price plunge of 9.15%, the worst single-day performance since May 2022. The consumer staples sector fell 1.93% to lead the declines, while discretionary spending fell 1.77%. Consumers' single spending decreased, while transaction numbers remained stable, indicating a clear downgrade.

Tech giants faced widespread pressure, with Apple down 1.75%, Amazon down 2.16%, Tesla down 1.71%, Google down 1.02%, Microsoft down 0.47%, and Nvidia down 0.33%, with the tech seven index falling over 1%.

AI financing scales are beginning to reach credit boundaries, with reports that Broadcom is negotiating over $60 billion in debt financing with Blackstone and Apollo, potentially reaching a total scale of $100 billion, to provide chips and infrastructure for companies like Anthropic, continuing the previous AI XPV cooperation framework. This indicates that AI construction is still accelerating, but also means that AI companies need to borrow more money, putting pressure on the credit market. Additionally, Anthropic is expected to publicly submit IPO documents by the end of this month, with fundraising potentially matching or exceeding SpaceX's previous record of $75 billion. The company's preliminary revenue in the second quarter exceeded $11.5 billion, with an annualized run rate of about $65 billion, but still a net loss for the year.

Last night, storage and optical communication strengthened, with Micron rising nearly 4%, Lumentum rising over 6%, and Marvell rising about 5.8%. Micron CEO Sanjay Mehrotra stated that AI has transformed storage from a cyclical commodity into strategic infrastructure, "Without storage, there is no AI." Demand from data center customers exceeds the company's committed supply by about 50%, with procurement models shifting from price comparison to collaborative design. The company is locking in demand through long-term agreements and announced a $10 billion investment to establish research laboratories over the next decade.

Specific Project Actions and Stock Price Fluctuations:

• Walmart plunged 9.15%: Slowest same-store sales in six years + guidance below expectations, dragging down the entire consumer sector.

• Micron Technology rose 3.97%: CEO emphasized AI rewriting cyclical logic, demand far exceeding supply, coupled with the $10 billion laboratory plan. The storage sector rose: SanDisk up about 2%, SK Hynix up 4.43%, SMI up 2.82%, Seagate up 2.12%, Western Digital up 1.51%, Rambus up 1.43%.

• Lumentum rose 6.24%: SK Hynix released the next-generation CPO roadmap, planning to extend optical interconnects to memory interfaces, reinforcing the market's trading logic of "insufficient bandwidth within AI clusters." The optical communication sector rose: Marvell Technology up about 5.8%, AAOI up 5.66%, Coherent up 0.89%, Astera Labs up 0.52%.

• Broadcom rose 0.43%: Broadcom is negotiating a debt financing plan of up to $100 billion with Blackstone and Apollo, planning to procure chips and infrastructure for AI companies like Anthropic through SPV, accelerating its challenge to Nvidia in the AI chip market. Related sectors: Blackstone down 2.58%, Apollo down 2.73%, Nvidia down 0.33%.

• SpaceX fell 4.05%, dropping below the IPO issuance price: The main reason is the arrival of the second round of lock-up stock releases, with up to 319 million shares held by insiders entering the tradable state, accounting for 7% of early investors and employee holdings, leading to increased supply pressure on the stock price. The commercial space sector generally retreated, with AST SpaceMobile (ASTS.US) down 2.06%, Rocket Lab (RKLB.US) down 3.81%.

• Moderna plummeted 23.55%: Significantly giving back the previous day's surge of 176% due to cancer vaccine news, dragging down the entire biotech sector, with the Nasdaq Biotech Index (NBI) down 2.92%.

• Alibaba rose 1.26%: Its AI cloud revenue grew 45% year-on-year, with adjusted EBITDA profit margin for AI cloud and computing business rising to 12%, and its self-developed chip, Zhenwu M890, covering over 650 customers. Most popular Chinese concept stocks fell, with Pinduoduo down 0.75%, NetEase down 5.85%, Baidu down 0.97%, JD.com up 0.20%, and Li Auto up 1.65%.

• Microsoft fell about 0.47%, Meta slightly down 0.04%: Meta reportedly spends hundreds of millions of dollars annually accessing AI models through Microsoft Azure, consuming trillions of tokens weekly. Microsoft Foundry's model market has 100,000 customers, but insiders say its largest AI clients are still concentrated in tech companies, including Meta, Adobe, Perplexity, and Sierra, reinforcing market concerns about AI demand being "highly internalized."

• Other giants: Apple down 1.75% (dragged down by rising long-term interest rates and overall cooling of tech stocks), Amazon down 2.16% (despite announcing that Prime Air drone delivery will cover nearly 500 US towns by the end of the year, but discretionary consumption pressure is stronger), Tesla down 1.71% (continuing to be affected by high valuations and a decline in risk appetite).

What to Watch Next:

August 21 (Friday)

• The Seoul Artificial Intelligence Summit will be held from August 19 to 21: Tech leaders from Google DeepMind, Google Cloud, Microsoft Research, Nvidia, LG AI Research, Hyundai Motor, and others will attend. The market is focused on new collaborations in large models, AI cloud, autonomous driving, AI chips, and enterprise applications, with related signals potentially catalyzing the global AI software, cloud computing, chip, and robotics chains.

• The World Robot Conference will be held in Beijing from August 19 to 23: Companies like UTree, UBTECH, Siasun, Galaxy General, and TianGong will showcase humanoid and industrial robot solutions. If production progress, order fulfillment, or cost reductions exceed expectations, A-shares in the robotics chain, including reducers, servos, motors, sensors, controllers, and complete machines, may receive emotional catalysts.

• NYMEX New York crude oil September futures will roll over: Under the risks in Hormuz and expectations of US sanctions against Iran, the rollover may amplify fluctuations in near-month contracts. If spot prices rise, it will indicate tight physical supply; if price spreads converge, upward momentum in oil prices may weaken.

• ZTE Corporation, Zijin Mining, Zhongji Xuchuang, Changfei Optical Fiber, Beike, and Sinopec earnings: Zhongji Xuchuang and Changfei Optical Fiber will verify demand for AI optical modules and optical fibers; ZTE will focus on computing networks and operator capital expenditures; Zijin Mining will be driven by gold and copper prices; Beike will reflect the recovery of China's real estate transaction chain; Sinopec will be directly affected by oil prices and refining price differentials.

August 22 (Saturday)

• The second World Humanoid Robot Games will be held from August 22 to 26: New events such as robot tug-of-war, throwing pots, and weightlifting will be showcased, focusing on humanoid robot motion control, stability, endurance, and scene adaptability. If on-site performance exceeds expectations, robot complete machines, reducers, servo systems, sensors, and AI control algorithms may continue to attract thematic funding.

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