Written by: Trend Research

On Wednesday, U.S. stocks ended a three-day losing streak, with the S&P 500 rising 0.47% to close at 7667.45 points, the Nasdaq up 0.45% at 26217.83 points, the Dow Jones up 0.56% at 53061.95 points, and the Russell 2000 leading with a 1.13% increase. The VIX reported at 15.20, down 6.98%. The Nasdaq 100 rose 0.23% to 29143.33 points, and the Philadelphia Semiconductor Index rose 0.45% to 11339.25 points. The market rebound was driven by two factors: the U.S. ADP private sector added only 38,000 jobs in August, the lowest since January this year, leading to a slight cooling of interest rate hike bets for September; AI hardware strengthened broadly, with Dell surging 15.76% due to record AI server orders, Nvidia rising 3.20%, and Micron increasing 2.43%. However, software and cybersecurity stocks plunged, with Credo crashing 20%, MongoDB dropping nearly 14%, and Palo Alto falling over 9%, reflecting significant shifts within the tech sector. The yield on the 10-year U.S. Treasury note fell from an intraday high, closing at 4.783%.

ADP added only 38,000 jobs, interest rate hike bets cool slightly

The U.S. ADP private sector added 38,000 jobs in August, the lowest since January this year, and far below market expectations, with the previous value revised up to 46,000. The wage growth rate for job switchers fell to 7.3%, while current employees remained at 4.4%. An ADP chief economist noted that changes in demographics, sticky inflation, and the impact of AI on employment have rendered wage growth unpredictable. Following the data release, market bets on a September interest rate hike cooled slightly.

However, the Federal Reserve's Beige Book provided a different signal. The Beige Book indicated moderate expansion in economic activity, slight growth in employment, and moderate price increases, with data center demand emerging as a major growth driver. The financial market priced in about a 65% chance of a rate hike at the meeting from September 15 to 16, with a high degree of uncertainty regarding the policy path.

ADP points to a loosening labor market, while the Beige Book indicates the economy remains resilient. The yield on the 10-year U.S. Treasury note briefly rose to 4.816%, the highest since the end of 2023, before closing at 4.783%, down about 1.3 basis points from the previous day; the 30-year yield fell to 5.25%, and the 2-year yield was at 4.369%. The yield on Japan's 10-year government bonds reported at 3.016%, continuing its first break above 3% since 1996. Long-term bond yields in Europe, the UK, and Japan continued to set multi-year highs during intraday trading.

Trump claims ready to strike again, oil price rise pauses

The U.S.-Iran military standoff continues to escalate. Trump stated that a new round of strikes against Iran would not "last too long," and the U.S. is prepared to strike Iran again at any time. Previously, Iran's Revolutionary Guard claimed to have attacked several U.S. bases in Kuwait, Jordan, and Iraq with missiles and drones, resulting in "multiple U.S. personnel casualties." The U.S. Central Command subsequently announced the completion of a new round of strikes, expanding targets from air defense systems to mine-laying capabilities and communication sites. Trump also proposed renaming the Strait of Hormuz to the "Trump Strait," claiming it is now under U.S. control.

After a surge on Tuesday, oil prices paused their upward trend on Wednesday. WTI crude rose 0.88% to $91.01 per barrel, reaching a session high of $92.29; Brent crude rose 1.04% to $95.63 per barrel, peaking at $97.04. U.S. commercial crude oil inventories fell by 4.5 million barrels to 424.5 million barrels, with refinery utilization rising to 98%. Inflation concerns subsequently cooled, with the yield on the 10-year U.S. Treasury note dropping from its intraday high. However, the geopolitical risk premium has not subsided, and Trump's statement of being "ready to strike again" suggests the situation may still escalate.

Dell surges 16%, leading AI hardware; software and cybersecurity stocks plummet

Dell stood out on Wednesday. With record AI server orders, it surged 15.76%. Nvidia rose 3.20%, Micron increased 2.43%, and the chip sector strengthened across the board.

Broadcom's earnings report was also impressive. In the third fiscal quarter, net revenue grew 86% year-on-year to $29.591 billion, while AI semiconductor revenue surged 221% year-on-year to $16.7 billion. The company raised its AI revenue guidance for the current fiscal year to $58 billion and provided a long-term roadmap for AI revenue of $230 billion by fiscal year 2028.

Software and cybersecurity stocks encountered significant declines. Credo dropped 20.04%, MongoDB fell 13.54%, and Palo Alto Networks decreased 9.31%. Funds shifted sharply within the tech sector, moving from software and cybersecurity stocks to AI hardware, reflecting the validation of AI infrastructure order data, while the valuation and growth expectations for software stocks are being reassessed.

Google launched Gemini 3.8 Flash just three weeks after the previous generation, marking the third iteration of the Flash model in six weeks, focusing on long-cycle programming and autonomous agents. Jensen Huang stated at the G20 that Nvidia has invested nearly $1 trillion in the U.S. this year, asserting that AI is akin to infrastructure like water and electricity that every country must build.

Yen spikes during trading, reaching 158, Bank of Japan rate hike expectations close to full pricing

The yen temporarily surged by 1.2% to 158.22 during trading, as the market watches whether the U.S. and Japan will intervene together again. The dollar against the yen hit a high of 160.39 before retreating, closing at 158.71, down 0.89%. Over the past month, Japan's Ministry of Finance has used a record $96.4 billion to defend the yen, and Bank of Japan officials recently expressed a hawkish bias, with the market's pricing for a September rate hike nearing completion. South Korea's foreign exchange authorities have taken unconventional measures, conducting currency operations to stabilize exchange rates.

The dollar index fell 0.11% to 99.51. The offshore renminbi against the dollar was around 6.7167.

Gold V-shaped rebound, Bitcoin stabilizes

Spot gold experienced a V-shaped reversal, rising 1.38%, after hitting a session low of $4282.63 and recovering, nearing $4400 per ounce; spot silver rose 1.92% to $65.14 per ounce. The weakening dollar drove the rebound in gold.

Amid rising geopolitical risks, the Dutch central bank moved approximately $12 billion in gold reserves from the U.S. to London. Previously, France had announced plans to withdraw all gold from the New York Federal Reserve between July 2025 and January 2026. Bitcoin was priced around $77,300, remaining roughly flat with the previous day.

Focus for today

U.S. August ISM services PMI (tonight). ADP data has already indicated a weakening in employment, and the ISM services PMI will verify whether the service sector is also cooling down. If the services PMI exceeds expectations, interest rate hike bets may reheat; if it weakens, it will further alleviate rate concerns, providing space for tech stock valuation recovery.

Federal Reserve Governor Waller's speech. Waller will accept an interview and address inflation prospects before the silent period ahead of the interest rate meeting, which the market views as the most important official statement before the September meeting, with his wording directly calibrating interest rate path expectations.