Written by: Trend Research

After the long weekend, funds flowed back into the stock market in one go, with the three major indices collectively closing in the green, pausing the decline following last week's non-farm payrolls. Saudi Arabia slashed the official crude oil price for August, marking the largest cut in nearly 26 years, with oil prices directly dropping below pre-conflict levels. A supportive statement from Trump for cryptocurrencies led to a V-shaped reversal for Bitcoin during midday trading.

Market Performance

The S&P 500 rose 0.72%, closing at 7537.43 points. The Dow Jones increased by 0.29%, closing at 53055.91 points, surpassing the historical high recorded on the non-farm payroll day (July 2). The NASDAQ gained 1.12%, closing at 26121.16 points, while the NASDAQ 100 climbed 1.26% to 29697.873 points, with both tech indices leading the way. The Russell 2000 slightly rose 0.45% to 3009.541 points. The VIX declined 1.58%, ending at 15.56.

Among the tech giants, Tesla stood out with a 6.69% increase, Meta rose 2.98%, Google A gained 1.82%, Apple was up 1.31%, Amazon increased by 0.61%, NVIDIA rose 0.37%, and Microsoft was the only one to close down, falling 0.96%. Chip stocks generally strengthened, with the Philadelphia Semiconductor Index rising 2.17% to 12900.142 points, TSMC ADR up 4.07%, AMD up 6.61%, and Western Digital rising over 7%. The support behind this trend came from NVIDIA confirming that their server roadmap had not changed, Broadcom and Apple renewed their chip manufacturing agreement until 2031, and Hon Hai's Q2 revenue rose nearly 40% year-on-year, better than market expectations.

Cryptocurrencies shone brighter than gold, with Bitcoin closing at $63,571, up about 1.4%, and Ethereum at $1,787, up 0.7%; gold fell to $4,162, down about 0.4%. Bitcoin temporarily dropped to around $61,000 during trading due to Strategy Company selling approximately $216 million worth of holdings, marking the second time this year such a significant reduction occurred. The real price rebound was triggered by Trump's supportive statement for cryptocurrencies made at the White House, which promptly brought Bitcoin back to its daily high. Crude oil was the weakest link of the day, with Brent falling to $71.75, hitting a new low since late February this year. U.S. treasuries and exchange rate fluctuations were minimal, with the 10-year yield falling slightly by 2 basis points to 4.47%, while the dollar rose to 162.03 against the yen.

Macro and Outlook

The recent price cut by Saudi Arabia was the largest in nearly 26 years; the last time they were willing to discount oil was during the price war in 2020. The reasons behind this are more related to excessive immediate inventories, with the intent to grab market share being relatively secondary; the market is worried about whether other oil-producing countries in the Gulf will be forced to follow suit. OPEC+ also raised its August production target by 188,000 barrels per day, with no signs of short-term relief on the supply side.

The U.S. June ISM Services Index released on Monday showed a slight slowdown in expansion speed, but hiring is warming up, and cost pressures have eased somewhat. The report also mentioned that many industries plan to raise prices, indicating that inflationary pressures have not really eased up.

Federal Reserve Governor Waller's comments during a meeting in Rome signaled a willingness to continue using forward guidance as a tool, but he is more concerned about inflation risks at present. The market has a consensus that the FOMC minutes led by Waller will likely be more restrained in wording than past minutes; nonetheless, traders' pricing for rate hikes in 2026 remains around 30 basis points higher than levels prior to Waller's appointment.

There are two voices emerging regarding the semiconductor sector. Mike Wilson from Morgan Stanley draws parallels between the current trends and those before the silver crash, bringing the discussion of bubble risks back to the table; meanwhile, BlackRock is concerned whether AI can keep profit margins at this unreasonably high level long-term, with the valuation itself being somewhat secondary. UBS has more practical concerns, looking at two things this week: whether the volatility of tech stocks can truly stabilize and whether the capital expenditures of major cloud providers will be forced to shrink.

SK Hynix's roadshow for its U.S. stock listing officially launched on Monday, aiming to raise 43 trillion Korean won, with management already receiving subscription intentions from large investors with a maximum scale of up to $7 billion.

Trend Perspective

This round of rebound resembles a sudden release of emotions built up during the long weekend, with no new variables appearing in the fundamentals. Funds have shifted from the bond market back to the stock market, with cyclical stocks surpassing defensive stocks in gains; the real drivers of prices over two days are the return of liquidity. Risk points are also concentrated: the semiconductor sector is being compared to the trends before the silver crash, and Saudi Arabia's largest price cut in nearly 26 years has again raised concerns about oversupply, with these two lines at risk of breaking the rebound momentum at any time. The real watershed moment will be on Thursday; if the FOMC minutes led by Waller are more restrained than market expectations, this round of rebound will likely hold until the start of earnings season; if the minutes unexpectedly turn hawkish, semiconductors and crude oil will be the first two lines that won't be able to hold up.