Overnight US Stock Market | Global Bond Yields Surge, S&P 500 Falls for Third Consecutive Day, SanDisk (SNDK.US) Drops 9%

According to Zhitong Finance APP, on Tuesday, the three major indices declined. U.S. President Trump stated that the U.S. has not engaged in any negotiations with Iran and has no plans to start new talks. Trump's statement on social media suddenly contradicted his earlier insistence that the U.S. and Iran were engaged in active negotiations, despite Iran repeatedly stating that no such talks were underway.

The yield on the U.S. 30-year Treasury bond hit a 19-year high on Tuesday. In addition, the yield on Japan’s 10-year government bond reached its highest level in thirty years. Germany’s 30-year Treasury yield reached its highest since 2011, while France’s 30-year Treasury yield hit its highest since 2008.

[U.S. Stocks] At the close, the Dow Jones fell 116.38 points, or 0.22%, to 53,343.39 points; the S&P 500 Index fell 53.30 points, or 0.69%, to 7,691.76 points, marking the third consecutive trading day of declines; the Nasdaq fell 355.20 points, or 1.33%, to 26,289.71 points. SanDisk (SNDK.US) fell 9%, Western Digital (WDC.US) fell 7%, Micron Technology (MU.US) fell 7%, SK Hynix (SKHY.US) fell over 9%, Nvidia (NVDA.US) fell 2%. The Nasdaq Golden Dragon China Index fell 1%, while Alibaba (BABA.US) rose 2.8%.

[European Stocks] The German DAX30 Index fell 238.91 points, or 0.91%, to 26,130.75 points; the UK FTSE 100 Index rose 5.09 points, or 0.05%, to 10,725.39 points; the French CAC40 Index fell 70.24 points, or 0.82%, to 8,509.36 points; the Euro Stoxx 50 Index fell 61.60 points, or 0.94%, to 6,468.85 points; the Spanish IBEX35 Index fell 52.08 points, or 0.26%, to 19,929.82 points; the Italian FTSE MIB Index fell 554.98 points, or 1.04%, to 53,032.00 points.

[Asian Stock Markets] The Nikkei 225 Index fell 2.54%, and the Korea KOSPI Index fell 1.55%.

[U.S. Dollar Index] The U.S. Dollar Index, which measures the dollar against six major currencies, rose 0.02% on the day, closing at 99.657 on the forex market. At the close of the New York forex market, 1 euro exchanged for 1.1576 U.S. dollars, higher than the previous trading day's 1.1572 U.S. dollars; 1 British pound exchanged for 1.3534 U.S. dollars, lower than the previous trading day’s 1.3538 U.S. dollars. One U.S. dollar exchanged for 159.60 Japanese yen, higher than the previous trading day's 159.59 Japanese yen; one U.S. dollar exchanged for 0.8125 Swiss francs, higher than the previous trading day’s 0.8115 Swiss francs; one U.S. dollar exchanged for 1.3906 Canadian dollars, higher than the previous trading day's 1.3877 Canadian dollars; one U.S. dollar exchanged for 9.5395 Swedish krona, higher than the previous trading day's 9.5193 Swedish krona.

[Cryptocurrency] Bitcoin briefly broke through $65,000 and as of press time was at $64,573.28; Ethereum rose 0.43%, to $1,912.66.

[Crude Oil] Oil prices hit a three-week high. WTI for September delivery rose 0.5%, settling at $84.94 per barrel; Brent for October delivery rose 0.2%, settling at $91.02 per barrel.

[Precious Metals] Spot gold fell to $4,334.81; spot silver was at $63.343.

[Macroeconomic News]

Traders are hedging against the risk of the Federal Reserve turning to rate cuts in 2027. Bond traders are once again adjusting their strategies. After a series of data suggested it's nearly impossible for the Fed to raise rates for the remainder of the year, options market bets are now attempting to hedge against the risk of a turn toward rate cuts in 2027. This dovish betting contrasts with movements in the U.S. Treasury market: long-term bond yields have reached multi-year highs as the Fed’s wait-and-see attitude keeps inflation above target for a longer period. Meanwhile, options traders closely related to Fed policy direction are shifting to focus on signs of U.S. economic weakness, believing this could trigger a market reversal. This came about after last week’s data showed inflation and consumer demand cooled in July, dampening expectations for a September Fed rate hike. Options market participants subsequently adjusted positions, reducing the amount of Fed rate hikes already priced in by the swaps market for the coming months. Some options are even considering hedging against the risk of a possible rate cut by mid next year. "People are less worried about rate hikes," said Jeff Schuel, Head of Rates at Constitution Capital, noting that recent positions betting on such an outcome are being unwound.

Mizuho expects the Bank of Japan to accelerate its rate hikes. Kenya Koshimizu, Co-Head of Global Markets at Mizuho, stated that the BOJ could raise rates again as soon as September and may increase the frequency of policy adjustments from about once every six months to once every three months. Koshimizu said a weak yen and inflationary pressures are prompting the Bank of Japan to act faster, and did not rule out the possibility of two rate hikes before the end of this year, bringing policy rates to 1.5%. The market currently estimates a 78% probability of a BOJ rate increase on September 18. He said Mizuho will continue a conservative JGB investment strategy, focusing only on inflation-linked and short-term government bonds. Although the 10-year JGB yield has reached a 30-year high, it remains below Japan’s nominal economic growth rate of about 4%. Koshimizu believes that global structural changes and investment growth may push Japan’s neutral rate higher, while inflation risks remain to the upside. Regarding the Japanese yen, he noted that the joint intervention by the U.S. and Japan shows neither side wants further yen depreciation, but the yen’s weakness is partly due to Japan’s loose monetary policy. He expects Japan's economy is undergoing the most important transformation in decades; Japanese stocks remain attractive, but financial market volatility could intensify.

Multiple U.S. states tighten data center construction; AI expansion faces regulatory pressure. Pennsylvania Governor Josh Shapiro issued an executive order imposing strict restrictions on data center construction, requiring projects to obtain local government approval before applying for a state permit, comply with water-saving standards, bear new electricity costs, and solve their own power supply issues. Shapiro said a large influx of data center projects is coming into Pennsylvania, with some developers ignoring community interests. As AI investments grow rapidly, an increasing number of U.S. states are limiting data center expansion to address electricity, environmental, and community pressures. New York State has already pushed for a one-year suspension of environmental permits for large data centers; Texas Governor Greg Abbott, traditionally supportive of data center development, has also suspended approval for some new projects and begun a review.

U.S.-Canada tariff negotiations deadlocked; hopes for an agreement are gradually fading. According to people familiar with the matter, with a new round of tariffs taking effect Wednesday, the Trump administration is lowering expectations that the U.S. and Canada will reach a last-minute agreement to avoid additional tariffs. Sources said internal U.S. messaging is that the possibility of an agreement on Tuesday is "fifty-fifty or lower." Both sides face a midnight deadline; by then, Canadian goods worth tens of billions of dollars would face a 50% tariff. It is unclear whether these signals truly reflect the state of the talks or whether the U.S. is trying to increase its bargaining leverage. Trump has a history of making demands to trade partners at the last minute. People familiar with the matter said Trump is expected to speak with Canadian Prime Minister Carney again on Tuesday. The two also spoke by phone on Monday.

AI positioning is too crowded; J.P. Morgan warns both equity and bond markets face concentration risks. Gabriela Santos of J.P. Morgan Asset Management warned that the concentration risk of the "AI factor" has now spilled over from equities into fixed income. While the AI supercycle investment logic still holds, investors increasingly need to be cautious. Santos said: "You can absolutely be very bullish on everything related to AI, but at the same time, you still need to be very careful about your portfolio construction." Santos said the tech pullback in July highlights the risk of over-crowded positions. During the month, the Philadelphia Stock Exchange Semiconductor Index plunged 21%, the biggest monthly drop since 2008; South Korea's KOSPI index also plummeted 22%. Santos said this market turmoil underscores the importance of position sizing, sensible use of leverage, and diversification beyond just AI sectors. She added: "This is where things get complicated. Because you can't just think about traditional risk factors, industries, or regions, or even just asset classes. Now, that AI 'tentacle' is reaching everywhere."

[Stock News]

29 U.S. states accuse Meta of profiting from teenagers as trial opens. A lawyer from the California Attorney General's office told the jury in court that for years, Meta Platforms (META.US) has repeatedly deceived the public, using its technology to target child users on Facebook and Instagram, aiming to make them addicted users in order to boost advertising revenues. In this landmark trial held in federal court in Oakland, California, the lawyer stated in opening arguments that the 29 states suing Meta are seeking to hold the company accountable for misleading children and their parents and causing misunderstandings about safety risks and privacy violations.

Apple reduces App Store fees in Europe to resolve dispute with European Union. Apple (AAPL.US) announced on Tuesday that it will change the developer fee from a per-installation basis to a 5% commission on digital transactions in apps distributed through channels outside the App Store, in order to comply with the EU Digital Markets Act (DMA). Apple emphasized: "These changes resolve the disagreements between Apple and the European Commission regarding commercial terms and alternative distribution methods, and by applying a unified set of commercial terms for all app developers distributing in the EU, the complexity of the rules is reduced. Developers can sign the new terms starting today, and the changes will take effect on October 1." In addition, Apple said App Store apps using alternative payment methods will be charged a 20% commission, although for those under its small business program, the commission rate can be as low as 10%.

[Major Bank Ratings]

UBS: Raises Snowflake (SNOW.US) target price from $370 to $425.