Collective plunge! Crude oil continues to soar!

【Introduction】U.S. stock three major indices all decline; Brent crude settlement price exceeds $100

On March 12 (Thursday) Eastern Time, the three major U.S. stock indices all fell more than 1.5%. The Dow dropped over 700 points, breaking below 47,000 points, hitting a new low for the year; Goldman Sachs and Boeing fell over 4%, leading the Dow lower. Brent crude oil settlement price exceeded $100 for the first time since August 2022.

All three major U.S. stock indices closed lower, with the Dow down 1.56% at 46,677.85 points, the S&P 500 down 1.52% at 6,672.62 points, and the Nasdaq down 1.78% at 22,311.98 points.

Brent crude settlement price breaks through $100

Due to millions of barrels of oil stranded in the Persian Gulf, Brent crude futures surged over 9%, marking the first time since August 2022 that the settlement price broke above $100 per barrel. U.S. West Texas Intermediate (WTI) crude futures rose $8.48, a 9.72% increase, closing at $95.73 per barrel.

According to CCTV News, on the 12th local time, Iran’s Supreme Leader Ayatollah Ali Khamenei said that revenge would not be abandoned, and the Strait of Hormuz will remain closed.

The International Energy Agency (IEA) said that the Middle East war has caused the largest oil supply disruption in history. Due to the conflict, oil production in Middle Eastern Gulf countries such as Iraq and Qatar has been reduced by at least 10 million barrels per day, nearly 10% of global demand. The agency stated that if shipping cannot be quickly restored, the losses will continue to increase.

The U.S. Department of Energy announced that it will release 172 million barrels of oil from the Strategic Petroleum Reserve. At the planned release rate, this delivery will take about 120 days. Next year, an additional 200 million barrels of crude oil will be added to the reserve, exceeding current reserves, with a replenishment scale of 20% above the withdrawal amount.

Major tech stocks and chip stocks collectively decline

Major tech stocks all declined, with Tesla down over 3%, Facebook down more than 2%, Apple nearly 2%, Google, Nvidia, and Amazon down over 1%, and Microsoft down 0.73%.

Chip stocks generally declined, with the Philadelphia Semiconductor Index down 3.43%, Intel down over 5%, TSMC down 5%, Microchip Technology down over 4%, Texas Instruments down over 4%, NXP Semiconductors down over 4%, AMD down over 3%, and Micron Technology down over 3%.

Nvidia announced that over the next five years, it will invest $26 billion in developing open-source AI large models, transforming from the world’s largest AI chip manufacturer to a frontier model laboratory, challenging the market positions of OpenAI, Anthropic, and DeepSeek. At the same time, it released Nemotron 3 Super, with throughput increased fivefold, claiming to surpass OpenAI’s open-source model GPT-OSS in multiple benchmark tests.

Netflix is cutting dozens of employees from its global product team during internal restructuring. According to media reports, Netflix declined to comment and did not confirm the number of layoffs. It is understood that the layoffs mainly involve the creative studio department. The team, composed of designers and producers, is responsible for creating marketing materials and providing content for offline experience events.

Fed rate cut expectations “cool down”

As energy prices and inflation concerns both heat up, market expectations for a Fed rate cut are declining.

According to FedWatch from the Chicago Mercantile Exchange, before the conflict, the market expected a 25 basis point rate cut in June, with another possible cut in September, and a small probability of three rate cuts, depending on economic conditions.

Economists surveyed expect the Fed to cut rates for the first time this year in June. Nearly 40% of surveyed economists predict only one rate cut or no cut this year, nearly twice the number of economists predicting three or more cuts.

Monica Griess, head of U.S. policy at Morgan Stanley Wealth Management, said that historically, geopolitical-driven market volatility is usually short-lived. But if oil prices continue to rise, “the Federal Reserve’s response mechanism could become more complex, supporting the federal funds rate remaining high for an extended period.”

Goldman Sachs expects the Fed to cut rates in September and December, as high inflation prevents the U.S. central bank from cutting earlier; previously, it expected rate cuts in June and September.

In a report on March 11, Manuel Abecasis and David Mericle stated that inflation exceeding expectations makes it difficult for the Fed to cut rates in the short term. However, they noted that if the labor market remains weaker than expected, the Fed might ignore inflation concerns and cut rates earlier.