LD Capital: Institutions Are Buying on the Dip

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Stock Market Overview

Amid concerns over higher government bond yields, inflation, China's slowing economy, and its looming debt crisis, major global stock indices have seen three consecutive weeks of declines.

The S&P 500 index has dropped over 5% since the end of July, with the NASDAQ 100 index and the Russell 2000 index both falling nearly 7%. Despite these declines, the stock market has surged about 20% since the beginning of the year.

The Dow Jones Industrial Average, consisting of large, stable companies, showed a milder drop, reflecting a preference for these enterprises in a rising inflation and interest rate environment. In contrast, high-valuation growth stocks in the NASDAQ may face more pressure due to rising capital costs.

Interest Rate Market

Last Thursday, the U.S. 10-year Treasury yield hit 4.33%, marking its peak since October, bolstered by supply-driven factors and robust economic indicators.

The ongoing real estate turmoil in China, underscored by the Evergrande Group's bankruptcy declaration in New York, has further intensified pessimistic outlooks.  Another Chinese real estate giant, Country Garden, warned of significant losses, leading to a Moody's rating downgrade.

Forex Market

The U.S. dollar strengthened with the DXY reaching a two-month high last week. The yuan briefly fell below 7.3, but the People’s Bank of China's defense of the yuan exchange rate led to a rebound.

Trending Events

A Federal Reserve Survey revealed that U.S. consumer short-term inflation expectations have hit a new low since 2021.

The Bank of Japan reported that July's service sector inflation reached 2% for the first time in 30 years.

U.S. July retail sales MoM growth of 0.7% exceeded expectations, marking the