"Oops, why has the US stock market plunged like this?" Old Wang muttered to himself as he browsed the news. It turned out that after the US stock market opened on September 3rd, technology stocks led the decline, with the Nasdaq index falling by 3.26%. What's more astonishing is that the chip industry was even more unbearable to watch, with the US chip giant NVIDIA's stock price plummeting nearly 10%, and the entire chip stock index falling by more than 7.7%.
What caused such a sharp drop in the US stock market and chip stocks?
The bad news from the US economy directly propelled the plunge in the US stock market. Data released by the Institute for Supply Management (ISM) showed that the US manufacturing Purchasing Managers' Index (PMI) for August was only 47.2, lower than market expectations. Although Old Wang didn't quite understand these technical terms, he knew that a PMI below 50 meant a sluggish economy. This data suggested that the US economy might be heading towards a recession, no wonder investors were nervous.
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NVIDIA's financial reports and sales data also greatly disappointed the market. Data from the Semiconductor Industry Association showed that chip sales fell by 11.1% from June to July. Old Wang pondered that this might mean the market demand for chips is not as high as previously expected, coupled with the US government's chip ban on China, which also affected the sales of US chip companies to some extent.
What does this plunge mean for the US chip industry?
Old Wang thought for a moment and felt that this plunge might not be caused by short-term factors alone. The market's expectations for the US chip industry may have changed.
He looked through some analysts' comments and found that many people believe that the prospects faced by the US chip industry may not be as optimistic as previously imagined. This is undoubtedly bad news for the US government. After all, the chip industry is one of the high-tech industries that the US takes pride in.
What surprised Old Wang even more was that he also saw some news about Chinese capital flowing out of the United States. It is said that more and more Chinese investors, for risk-avoidance considerations, choose to keep a distance from the United States. Although this impact is not very obvious at present, in the long run, it may have a significant negative impact on the US economy.
Old Wang couldn't help but sigh: "What are the people in Washington thinking? Is containing China more important than developing their own economy?"
What impact will the Federal Reserve's policy changes have on the situation?Just as Old Wang was worrying about the prospects of the US economy, he came across an interesting piece of news. The Federal Reserve Chairman, Jerome Powell, recently stated that the time for policy adjustments has arrived, and the Fed has no intention of suppressing the job market, with increased confidence in the return of inflation to 2%.
Although Old Wang doesn't quite understand economics, he knows this means that the Federal Reserve is likely to start lowering interest rates, ending the period of high interest rates in the United States. He recalls hearing economists say that if the US economy is sluggish and inflation does not rebound, the Fed might accelerate the pace of rate cuts.
"It seems the Fed can't hold on either," Old Wang muttered to himself, "This era of high interest rates is coming to an end, which is actually good news for China."
He looked at the analysis more carefully and found that a rate cut by the Fed indeed has quite a few benefits for China. It would increase liquidity in the market, promoting a faster economic rebound in China; the US dollar exchange rate might come under pressure, while the Chinese yuan exchange rate would gain new support, aiding in the internationalization of the yuan.
"You Americans, always talking about competing with us, but you're the ones who are disorganized first," Old Wang muttered to himself, "I don't know what they're really worried about."
Recalling the news from the past few years, Old Wang felt that the US was causing trouble for itself. Think about it, on one hand, they're shouting to contain China, on the other hand, they're pushing their own businesses to the brink. Isn't that slapping their own face?
The US has been implementing so-called 'technology blockades' for years, trying to curb China's development. But they forgot one thing: in this era of globalization, when you block others, you're actually blocking yourself.
It's not just NVIDIA; the entire US chip industry has been affected. They restricted chip exports to China, and as a result, China has accelerated its own research and development efforts. Now, China's chip technology is advancing rapidly, and US companies have lost a huge market instead.
And have you noticed that Chinese capital is also starting to withdraw from the US? This is not good news for the US economy. The Fed's interest rate cut does indeed mean they have insufficient confidence in the economy.
A weaker US dollar means a relatively stronger Chinese yuan. This is not only beneficial for the internationalization of the yuan but also attracts more international capital to flow into China. Coupled with China's more flexible economic policies now, it is very likely to usher in a new wave of development opportunities.The international situation is ever-changing, and we must still focus on our own affairs, continue to deepen reform and opening up, and enhance our capacity for independent innovation. We cannot merely watch others make fools of themselves; we must also strive for improvement.
Although the United States may appear to be in disarray at the moment, China cannot afford to be complacent. After all, the real competition is ongoing, and it is uncertain who will have the last laugh.
By acting in such a manner, isn't the United States pushing itself into a corner? Engaging in trade wars and imposing technological blockades—what is the outcome? Its own enterprises suffer, economic growth slows, and it pushes China onto the path of independent innovation. Isn't this like lifting a rock only to drop it on one's own foot?
The policies of the United States are indeed somewhat perplexing. Globalization has become an irreversible trend, yet they insist on going against it, causing discomfort for themselves and others.
Perhaps this is where the charm of life lies. Even in ordinary days, we can learn a great deal from the changes in the world and gain a deeper understanding of life. Whether it is the chip giants of the United States or the ordinary people of China, we are all searching for our place in this rapidly changing world, looking forward to a better future.
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