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Policy swiftly curbs oil prices, but cannot dispel fiscal uncertainties.
The three major U.S. stock indices showed divergent performance: the Dow Jones Industrial Average rose 0.26%, supported by financials, consumer staples, and defensive blue-chips; the S&P 500 fell 0.28%; and the Nasdaq Composite declined 0.76%, with AI hardware stocks facing the heaviest selling pressure.
Bensent launched the "Economic Outcast Initiative" on Monday, targeting Iran's five critical lifelines—digital assets, technology, gold, aviation, and shipping—and threatened secondary sanctions against countries continuing dealings with Tehran. Trump is communicating with world leaders to demand an end to economic interactions, granting involved parties a grace period for compliance; otherwise, the Treasury will act unilaterally. Iran’s Supreme Leader advisor Mohammadi swiftly responded: the countermeasures will be more resolute than ever, as decades of sanctions and warfare over the past 47 years have failed, and now Iran stands united with the deterrent power of the Strait of Hormuz. The Speaker also stated that trade partners “will not take seriously” the U.S. rhetoric.
The market quickly priced in “buy the rumor, sell the fact”: Brent crude fell 2.35% to $92.17 per barrel, while WTI slid同步 to around $85.01, temporarily easing inflation premiums. Goldman Sachs cautioned that if the Strait of Hormuz crisis persists into winter, pressure on European natural gas inventories could intensify further, potentially requiring TTF gas prices to rise above €100 per MWh to attract sufficient LNG supply; current European gas storage levels stand at only about 62%, the lowest for this time of year in nearly 20 years.
On the same day, Bessent maintained restraint regarding Treasury operations: “We haven’t even bought a single bond yet,” with the next repurchase not scheduled until September 9. Earlier reports suggested the Treasury might tap nearly $1 trillion from its TGA (Treasury General Account, with a balance of approximately $935–950 billion) to fund the expanded long-term bond repurchase program; Morgan Stanley interest rate strategist Martin Tobias estimated the available range at $80 billion to $200 billion. Goldman Sachs, Deutsche Bank, and Citadel Securities collectively cast doubt: repurchases alone cannot fundamentally reset long-term rates—the true root causes are America’s $40 trillion debt, fiscal deficits, and inflation; Citadel Securities explicitly labeled the move as “financial repression,” arguing that pressure would merely shift to the dollar, inflation, and other assets. The 10-year Treasury yield fell about 3 basis points to around 4.70%, while the 30-year yield declined to 5.24%.
The U.S. dollar index rose slightly by about 0.20% to around 99. The dollar's gains were primarily driven by safe-haven demand stemming from sanctions on Iran, but markets are also beginning to worry that if the Treasury forcibly suppresses long-term interest rates, the dollar could face downward pressure in the future. Data shows that the premium of dollar put options over call options for the next month has risen to its highest level since February.
Gold continues to strengthen, reaching as high as $4,696 intraday, a three-month high; New York gold futures further rose to $4,755. Citi has raised its 0- to 3-month gold price target to $4,800 per ounce and maintains its 6- to 12-month target at $5,000 per ounce. JPMorgan cautioned that if PCE inflation comes in higher than expected, gold may retest lower levels; however, if the data is mild and Jackson Hole does not signal a strongly hawkish stance, gold prices could quickly approach $5,000.
Additionally, Trump continued to pressure trade markets, criticizing Canada for "taking advantage of the U.S." and warning that more severe consequences would follow if Canada does not comply with the rules. Market reports suggest that the U.S. may raise tariffs on Canadian automobiles, parts, and steel to 50% starting in 2027, which could impact the cost of the North American automotive supply chain.
The AI hardware sector is experiencing widespread losses, with storage and optical communications hit hardest, as capital shifts toward more stable technology platforms.
Last night and early this morning, U.S. stocks in the AI hardware and semiconductor sectors experienced heavy selling, with the Philadelphia Semiconductor Index plunging nearly 3%. The memory sector declined approximately 5.5%, and the optical communications sector led the losses.
NVIDIA fell 2.91%, marking its seventh consecutive trading day of declines—the longest such streak since 2022. The price drop contrasts sharply with fundamental expectations: NVIDIA executives stated that the Groq 3 LPX rack has entered full-scale production, focusing on low-latency AI inference, and will be deployed alongside the Vera CPU and Rubin GPU in Nebius data centers. Additionally, over the past three months, Wall Street earnings forecasts have been raised by approximately 13%, with the vast majority of 82 analysts maintaining a "buy" rating.
However, traders are more focused on the risks ahead of the earnings report, as NVIDIA will release its earnings this week, and the market worries that even strong results may not be strong enough to justify its current valuation. Goldman Sachs believes that NVIDIA’s demand data in Wednesday’s earnings report could be “absurdly strong,” but the real issue lies in memory costs and AI infrastructure financing. If hardware costs continue to rise, NVIDIA will ultimately have to choose between absorbing the costs, raising prices for customers, or reducing its reliance on memory.
Wall Street is growing increasingly wary of credit risks in AI infrastructure: Broadcom’s 5-year CDS has risen by 28 basis points since August, and the yield on its bonds maturing in 2031 has increased by approximately 14 basis points over the same period, with risk premiums even surpassing those of Oracle and SpaceX. JPMorgan strategists have warned that off-balance-sheet credit supports in the AI ecosystem—including lease agreements, procurement commitments, and residual value guarantees—could ultimately reach trillions of dollars, sparking deep market concerns over “compute lending” and off-balance-sheet leverage risks.
Storage chains have become a major pain point, as Samsung Electronics' shareholder return plan fell short of expectations, triggering a second wave of selling across global memory stocks. Micron, SanDisk, Seagate, Western Digital, and SK Hynix all suffered significant declines, as markets worry that the price increase cycle driven by HBM and AI servers has already been overpriced into valuations. The optical communications sector is also under pressure: Applied Optoelectronics saw its stock plunge nearly 14% after announcing its third ATM financing initiative this year, aiming to raise $600 million, sparking investor concerns over cash flow and equity dilution, which dragged down peers including Ciena, Lumentum, and Coherent.
Specific project actions and stock price fluctuations:
NVIDIA fell 2.91%, marking its seventh consecutive trading day of declines—the longest such streak since 2022—with a cumulative drop of over 7% during the period. Selling pressure ahead of the earnings report dominated trading, despite analysts raising earnings forecasts by 13% over the past three months, with most maintaining a "buy" rating and target prices implying over 50% upside, while the forward P/E ratio has declined to approximately 18x.
The semiconductor sector declined broadly, with Broadcom falling 2.63%: its bond yield maturing in 2031 surged 14 basis points, and its CDS spread rose 28 basis points in a single month, as Wall Street warned that the residual value guarantees it provides for AI data center leasing and procurement contracts are accumulating significant off-balance-sheet credit risk. The Philadelphia Semiconductor Index dropped 2.7%, AMD fell over 3%, Intel declined more than 3%, and TSMC dropped over 2%.
Memory chips plunged collectively, with Micron down nearly 6%: Samsung’s shareholder returns fell short of expectations, intensifying market concerns that the memory cycle has peaked. SanDisk dropped 6.45%, Seagate fell over 6%, Western Digital declined more than 5%, and SK Hynix slid nearly 5%.
Optical communications are hit hard: Applied Optoelectronics drops nearly 14% as the company plans to raise $600 million through an ATM offering, sparking concerns over equity dilution and funding pressure. Ciena falls over 6%, Lumentum drops over 4%, Coherent declines over 4%, and Marvell Technology slides over 3%.
Tesla fell 3.83% primarily due to a voluntary recall of approximately 3 million vehicles in China over issues with door handles and driver monitoring systems—the largest single-brand recall on record. Although the company is scheduled to host a Cybercab event on September 3, traders estimate only a 17% probability of delivering to retail customers this year. In related sectors, XPeng fell over 8%, NIO declined nearly 6%, and the broader Chinese new energy vehicle chain faced overall pressure.
Meta rose 1.66% against the trend: Meta plans to launch the "Hatch" AI agent platform over the coming weeks, an AI-powered shopping tool on Instagram, and intends to release its latest AI model, "Watermelon," in October; the premium subscription may cost up to $199.99 per month. In related sectors, Amazon rose 1.33% (AWS launched Glue 6.0, reducing prices by 30%), Microsoft rose 0.84%, Google rose nearly 1%, and Apple rose 0.32%, indicating strong resilience among major platform stocks.
SpaceX fell 1.44%: SpaceX AI will leverage NVIDIA’s Vera CPU to advance Agentic AI, with plans to extend the optimized Vera Rubin NVL72 to space for use on Starmind AI satellites; meanwhile, NASA’s Roman Space Telescope is scheduled for launch on August 30 aboard a Falcon Heavy rocket.
Other giants: Bloom Energy rose 1.28% after Pelosi disclosed her first purchase of Bloom Energy stock and options, while also increasing her position in Intel, betting on AI power and chips; Boeing fell 1.75% after news emerged after hours that it secured a U.S. Air Force F-15 contract worth up to $131.2 billion; Visa rose 3.07%, Walmart rose 2.69%, and Disney rose 2.62%, providing key support for the Dow’s consecutive gains against the market trend.
Next, pay attention to:
August 25 (Tuesday)
Jefferies Semiconductor, IT Hardware, and Communications Technology Conference will be held on August 25–26: Numerous leading semiconductor and technology companies, including TSMC, FormFactor, Aehr Test Systems, and Arbe Robotics, will participate in discussions. Industry conversations will focus on key innovation areas such as AI accelerators, high-bandwidth memory (HBM), advanced packaging, data center demand, and automotive semiconductors.
August 26 (Wednesday)
The Gamescom gaming expo in Cologne, Germany, will take place from August 26 to 30, opening at 02:00. Major companies including Microsoft, Nintendo, Tencent, NetEase, and CDPR will make concentrated appearances. The market is focused on announcements regarding new game releases, AI-powered gaming tools, cloud gaming, and hardware ecosystems, which could influence sentiment in gaming, graphics cards, consoles, and content platforms.
Deutsche Bank's California Tech Conference will be held in Dana Point, California, from August 26 to August 27.
The Shenzhen AGIC General AI Exhibition will be held from August 26 to August 28, coinciding with the Data Expo (August 28 to August 30), with a dense schedule of AI industry conferences focusing on embodied intelligence and the progress of AI application deployment.