Reuters rumors roiled U.S. stocks, with the Nasdaq losing all its gains for the year. Where is the market headed?

Rumors from the professional rumor mill Reuters previously falsely claimed that Intel was being acquired, and last night they said tariffs would be delayed for 90 days, only to retract the statement 7 minutes later, causing a massive $2.5 trillion fluctuation in the U.S. stock market.

Investors trapped at the peak have already called the police, suggesting the SEC investigate Reuters for obvious market manipulation.

After a roller-coaster ride, the $NASDAQ Composite Index(.IXIC.US) closed up 0.1%, while the $S&P 500(.SPX.US) fell 0.23%, and the $Dow Jones Industrial Average(.DJI.US) dropped 0.91%.

Taking the Nasdaq as an example, it has fallen 22% since late February, wiping out almost all of its gains for 2024.

The underlying causes of this situation have been discussed many times. At its root, the massive valuation bubble is the "Sword of Damocles" hanging over the U.S. stock market. As U.S. stocks reached new highs, various valuation metrics not only matched but in some cases exceeded those seen during the peak of the 2000 dot-com bubble. However, the macroeconomic environment has changed dramatically since then. In 2000, U.S. stocks benefited from global geopolitical stability, and the internet technology boom sparked a far-reaching technological revolution, laying a solid foundation for global productivity growth over the next 20 years. Today, however, the U.S. economy faces numerous challenges: debt levels have ballooned to unsustainable levels, inflation is running wild, and average GDP growth is only about half of what it was in 2000. While the AI sector, particularly large language models, is currently a hot topic, it is still far from triggering a fundamental productivity revolution. Unless artificial general intelligence (AGI) is achieved, the field will face significant bottlenecks. Given the current "brute-force" approach of throwing massive resources at the problem, the prospects for achieving AGI remain uncertain.

Looking back, the signs of the U.S. stock market peak were evident. Two key conditions signaled the top: First, Nvidia's stock lost momentum. The release of its Q3 earnings marked a turning point, with the stock briefly touching $152 before a short-lived rally to $153 following optimistic remarks by Jensen Huang at CES, only to reverse sharply afterward. The countdown to the U.S. tech stock crash began in earnest after Trump officially took office. Second, Japan's interest rate hike. After Japan raised rates, only the S&P 500 briefly touched a new high before all three major U.S. indices plunged. The reason? Japan's rate hike effectively ended the long-standing carry trade between the yen and U.S. tech stocks.

Currently, the performance of the "Magnificent Seven" U.S. tech giants is dismal. Industry leader Nvidia has fallen 40%, Tesla has plummeted as much as 60%, and the other five companies have seen declines of 25% to 30%. While U.S. tax hikes have accelerated the bursting of the tech bubble and driven stocks lower, even without the tax factor, the weakening momentum in these stocks was evident. For example, Nvidia's stock peaked at $140 last June and has barely moved in the eight months since, gaining no more than 10%. Tesla, meanwhile, had already dropped 60% before the tax hike was implemented. This confirms earlier predictions about the trajectory of U.S. tech stocks.

However, when analyzing this global market crash, we cannot overlook the amplifying effect of panic driven by the tax hike news. In financial markets, panic-driven sell-offs often share a common trait: once the panic subsides, a sharp rebound can occur within a short period. But it's important to recognize that the true long-term impact of the tax hike won't be fully apparent immediately; instead, it will gradually manifest in economic data and market trends over the next three months. By then, the U.S. will face its massive debt problem as the core constraint on economic and financial stability, while China's Consumer Price Index (CPI) trends will be critical in shaping domestic economic policy and market expectations. The future of global financial markets remains highly uncertain, and only by staying vigilant can investors and observers navigate these turbulent times and make informed decisions.