Fed Divided on Rate Cuts; Google Hits Record High; Ctrip's Q3 Profit Soars.

Federal Reserve Officials Discuss Interest Rate Cuts

Cautious Approach to Further Rate Cuts

Federal Reserve Vice Chair Jefferson stated on Monday that the Fed needs to proceed "slowly" regarding further interest rate cuts as it relaxes policy to a point that may halt progress in reducing inflation. He noted an increase in downside risks to employment but emphasized the need for caution as rates approach neutral levels. Jefferson mentioned that the balance of risks in the economy has shifted, with downside risks to employment increasing compared to inflation.

Support for December Rate Cut

Fed Governor Waller expressed support for a risk-managed rate cut in December, citing concerns over a sharp slowdown in the labor market. He indicated that he is not worried about accelerating inflation but is focused on the labor market's health. Waller suggested a 25 basis point cut to provide additional support against a weakening labor market.

Market Reactions and Analyst Insights

Market Anxiety Ahead of Nvidia Earnings

Analyst Adam Button noted that the buying momentum in the U.S. stock market has waned, with anxiety building ahead of Nvidia's earnings report. Since late October, market movements have been inconsistent, influenced by expectations of tighter monetary policy from the Fed. The likelihood of a December rate cut has dropped to 36%, indicating a cautious market sentiment.

Morgan Stanley's Positive Outlook for S&P 500

Morgan Stanley strategist Michael Wilson predicts a 16% rise in the S&P 500 over the next year, driven by strong corporate earnings. He expects earnings per share for S&P 500 companies to grow by 17% and 12% in the next two years, supported by improved pricing power and stable interest rates.

Regulatory Developments

IRS Proposal on Cryptocurrency Taxation

The Trump administration is moving forward with a proposal that would allow the IRS to tax U.S. citizens' overseas cryptocurrency accounts. This initiative aims to combat international tax evasion by sharing information on cryptocurrency holdings among member countries.

Stock Market Performance

Major Indices Decline

On Monday, all three major U.S. indices fell to one-month lows as investors focused on Nvidia's upcoming earnings and economic data. The Dow Jones dropped 1.18%, the Nasdaq fell 0.84%, and the S&P 500 decreased by 0.92%. Notable tech stocks like AMD and Nvidia saw declines, while Google experienced a rise.

Hong Kong Market Activity

In Hong Kong, net buying of stocks reached HKD 8.448 billion, with significant purchases in the Tracker Fund and Alibaba. However, several stocks, including XPeng and Baidu, faced net selling.

Company News

Apple’s New iPhone Release Strategy

Apple plans to change its iPhone release strategy, introducing high-end models in the fall and standard versions in the spring starting with the iPhone 18 series.

Tesla's Chip Supply Strategy

Elon Musk announced plans for Tesla to build its own chip factory, citing slow progress from current suppliers like Samsung and TSMC. He anticipates a massive increase in chip demand due to Tesla's FSD technology.

Morgan Stanley Downgrades Hardware Giants

Morgan Stanley downgraded several hardware companies, including Dell and HP, due to rising memory prices and weakening demand for non-AI hardware.

Amazon's Bond Issuance

Amazon has set its dollar bond issuance at $15 billion, attracting around $80 billion in subscriptions, marking its first high-rated dollar bond issuance in three years.