Prices fell for the first time since 2020, and market

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Prices fell for the first time since 2020, and market conditions changed 180 degrees. Technology stocks, which were doing well, fell sharply, while small and medium-sized stocks recorded huge gains. Interest rates fell sharply, reflecting the fall in prices in interest rates.

The U.S. CPI fell to -0.1% month-on-month in June, the first drop since May 2020. It was also lower than expected +0.1% month-on-month. Expectations for a rate cut in September were even higher as Powell's speech in the House and Senate this week was very dovish and price indicators were also low. The weekly number of new unemployment insurance claimants announced every Thursday fell. Last week, 222,000 new unemployment insurance claimants dropped by 17,000 from the previous week. However, it was not enough to change the trend in the market. With price indicators stable, the possibility of a rate cut in September FED WATCH is over 90%.

Rising expectations for a rate cut sent tech stocks leading the existing market plummeting in profit-taking, while shares of the rest of the relatively sluggish companies rose sharply. Nvidia, a key player in recent gains, fell 5.5% and Nasdaq cap top players, including Meta -4.1% Broadcom -2.2%, Qualcomm -4.3%, and Micron -4.5%, mostly fell sharply. On the other hand, the Russell 2000 index of small and medium-cap stocks, which has been sidelined throughout the year, closed up more than 3%. Expectations for a rate cut gave existing leaders an excuse for profit-taking, and for marginalized stocks, it instilled expectations for a recovery. The spread of the gains is also a healthy adjustment in terms of the spread of the gains. Tesla's stock, which rose the most recently among tech stocks, fell the most. It fell more than -8% on news that Tesla Robotaxi Day was postponed for two months from August to October.

It's true that Nasdaq, especially tech stocks, have risen excessively in a short period of time. Someday it will come. We don't know when it will come, so we need to be prepared, but the way to prepare is bonds. The previous day interest rates fell significantly. Bond prices would have gone up significantly. The Nasdaq Composite is up 21% this year, and Nvidia is up 150%. The end of the rise is unknown. But the signals are coming from all over the place. Little by little, it's time to prepare for the risk.