US Stocks Plunge 1,300 Points: Soft Landing in Question

In the United States' harvest plan, striking at other countries' exchange rates is an important link, but the fundamental goal is to attract more capital inflows into the U.S. to prepare funds for the next round of massive purchases.

However, it is clear that the U.S. layout has failed.

U.S. stocks have once again experienced a continuous decline, and the U.S. real estate and manufacturing industries are on the brink of recession.

The World Economic Forum's published survey data of economists has also reached a pessimistic conclusion.

01, U.S. stocks fall by 1,300 points

Early this morning, the U.S. stock market fell again, with all three major indexes falling by more than 0.7%, among which the Nasdaq index's decline is close to 1%.

The highest point of the Dow Jones Industrial Average on Monday of this week was 34,342 points, but it closed at 33,044 points yesterday, with a continuous decline in the last three trading days, totaling 1,300 points.

As a result, the index has also become the first among the three major U.S. stock indexes to turn its annual increase into a negative number.

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Last year, the best-performing of the three major indexes was the Dow Jones Industrial Average, but this year it has become the worst-performing index.

The rise of U.S. stocks since 2023 has mainly benefited from the unexpected decline in inflation data and China's reopening.However, recent tight employment market data and the lack of highlights in Q4 financial reports have led to a tense mood among U.S. stock investors. After reconsidering the potential impact of future interest rate hikes and balance sheet reduction by the Federal Reserve on the economy, investors have once again begun to sell off.

02, Capital Retention Issues

Previously, the continuous interest rate hikes in the U.S. led to a constant rise in the U.S. Dollar Index, which was the prerequisite for attracting capital into the country.

But now the biggest problem is the lack of attractiveness of dollar assets. Even with a large amount of capital entering the U.S., there are no assets suitable for medium to long-term holding. Therefore, as soon as the U.S. Dollar Index began to show signs of decline, capital started to flow out again.

Not only are U.S. stocks falling and unable to retain capital, but the U.S. real estate and实体经济 also fail to retain capital.

Now, many Wall Street giants have mentioned in their New Year's forecasts that the U.S. real estate market may further contract, with transaction volumes not increasing and housing prices continuing to fall.

At the same time, U.S. manufacturing is on the brink of recession, with retail data falling more than expected on a month-over-month basis, indicating that U.S. consumer power is continuously weakening, which in turn affects the performance of the manufacturing sector.

03, Soft Landing? Not Optimistic!

Currently, both the U.S. government and private sectors generally agree on the Federal Reserve's decision to raise interest rates by 25 basis points each in February and March. However, there is a significant divergence in predictions for the future outlook of the U.S. economy.

Federal Reserve Vice Chairman Randal claimed that interest rates still need to remain high for a longer period, which means that the Federal Reserve will not consider lowering interest rates in the short term.She also pointed out that an increasing number of economic signals indicate that the United States will achieve a soft landing, but this seems to be contrary to the opinions of the majority in the market. According to the latest survey report released by the World Economic Forum, among numerous economists worldwide, 82% believe that the economic growth of the United States will be weak, and 9% believe it will be in a very weak state. Clearly, the vast majority of economists do not have a positive outlook on the U.S. economy.

Overall, the U.S. authorities seem more like they are whitewashing the peace, and the IMF also believes that the growth rate of the U.S. economy will further decrease in 2023.