"US Stocks Plunge: Dow Down 1,100 Points, Nasdaq Dives 4%"

Last night, stock markets in Europe and America fell in sync, with all three major U.S. indexes down more than 3%.

In Europe, Germany fell by 2.3%, and France fell by 1.7%.

International gold fell by $21 yesterday.

International crude oil prices fell by nearly 2% on Thursday, then barely rose by 0.5% yesterday, currently standing at the $93 threshold.

The international financial market is in turmoil, which ultimately stems from the annual meeting of global central banks, where central banks from various countries have expressed their views on future monetary policies.

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The Dow Jones Industrial Average reached a high of 33,364 points shortly after the opening, but closed at the lowest with a drop of 1,100 index points to 32,278 points.

The Nasdaq index also fell by 497 index points, a drop of 3.94%, by the close. The S&P 500 index fell by 3.37%.

Investors' panic selling stems from the sudden realization that they were wrong before, and the situation has not become optimistic.

Yesterday, the global central bank meeting was held, and Powell made predictions about the future monetary policy of the Federal Reserve.In recent days, several officials from the Federal Reserve have successively made statements, all sending a similar signal that significant interest rate hikes will still be needed in the future to curb inflation.

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Federal Reserve Chairman Jerome Powell also indicated at the annual global central bank meeting that making a premature shift in monetary policy is not an appropriate move. If relaxation comes too early, it could easily lead to a rebound in inflation. Currently, to fight inflation, it is natural to endure economic pain.

From his statement, we can see that to curb inflation, the Federal Reserve is willing to pay the price of economic decline or even recession, which has caused panic in the market.

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After hitting a low of 29,653 points in mid-June this year, the Dow Jones Industrial Average began a round of rebound, exceeding 34,000 points at its highest. The rebound exceeded 14%, leading the market to start imagining the potential for further increases.

The starting point of the rebound was between the interest rate hikes in June and July. After a 50 basis point rate hike in May, the Federal Reserve raised rates by 75 basis points in both June and July this year. But even with the cumulative increase of 150 basis points over these two months, the U.S. stock market was able to rise from a low point.

Global investors' confidence stems from the prediction that the Federal Reserve will shift direction after the July rate hike, with a reduced rate hike in September, and there is even a possibility that due to unsatisfactory economic data, there could be a shift in monetary policy in 2023, resuming economic stimulus through easing.

However, from Powell's latest statement, whether economic data is satisfactory is not the Federal Reserve's current primary concern; combating inflation remains the key first step.

Moreover, the economic data released in recent days has been more optimistic than expected.

The second quarter U.S. GDP decline was further revised to 0.6%. Previously, the initial value was a 0.9% decline in the second quarter GDP, and the market's forecast before this revision was a 0.7% decline, but now the revised value is only 0.6%.This seems to indicate that the U.S. economy is not as bad as imagined, which also provides a very good foundation for the Federal Reserve to implement more aggressive interest rate hike policies.

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When the market realized from Powell's speech that past expectations for future monetary policy were overly optimistic, market sentiment instantly turned extremely pessimistic, leading to panic selling.

After last night's sharp decline, we have seen that the Dow Jones Industrial Average's drop this year has once again exceeded 10%, reaching 11.2%; the S&P 500's drop this year is close to 15%; and the Nasdaq's drop in 2022 has exceeded 20%, reaching 22.4%.

In contrast, the U.S. stock market's year-to-date drop has once again significantly exceeded that of the European stock markets.

Among the major economies in Europe, Germany's stock market has the largest drop of 18%, France has fallen by 12%, and the UK has risen by 0.6%, while in Asia, Japan has only fallen by 0.5% so far.

How the global stock market will perform next week will depend on the speeches made by other central banks at the global central bank conference over the next two years.