Overnight US Stocks | Three Major Indexes Fall for Second Consecutive Day, 10-Year Treasury Yield Rises to Highest Level Since 2007, WTI Crude Oil Surges 4%

According to Zhihui Finance APP, on Tuesday, the three major indices fell for the second consecutive day as investors awaited the imminent Federal Reserve rate decision, with the market almost fully pricing in a 25 basis point rate hike. The U.S. benchmark 10-year Treasury yield rose to the highest level since 2007, reaching 5.041%.

[U.S. Stocks] At market close, the Dow Jones fell 328.09 points, or 0.63%, to 52,093.10 points; the S&P 500 dropped 34.25 points, or 0.45%, to 7,585.73 points; and the Nasdaq fell 204.84 points, or 0.78%, to 25,981.57 points. Qualcomm (QCOM.US) rose by 4%, Oracle (ORCL.US) dropped 3%, and SK Hynix (SKHY.US) fell 0.4%. The Nasdaq Golden Dragon China Index fell 1.1%, with XPeng Motors (XPEV.US) down 4.5%.

[European Stocks] The German DAX30 rose by 0.78 points, virtually unchanged at 25,415.84 points; the FTSE 100 in the UK fell 44.01 points, or 0.41%, to 10,653.56 points; French CAC40 dropped 27.50 points, or 0.34%, to 8,090.28 points; the Euro Stoxx 50 index declined 22.73 points, or 0.36%, to 6,237.65 points; Spain's IBEX35 fell 6.46 points, or 0.03%, to 19,557.44 points; and Italy's FTSE MIB lost 102.27 points, or 0.20%, to 51,526.50 points.

[Asian Markets] The Nikkei 225 was little changed, while Korea's Composite Index fell 0.85%.

[U.S. Dollar Index] The dollar index, which measures the dollar against six major currencies, rose 0.23% during the day, settling at 99.616 by the end of New York trading. At the close, 1 euro exchanged for $1.1543, down from $1.1557 on the prior day; 1 British pound exchanged for $1.3481, down from $1.3511. 1 U.S. dollar exchanged for 155.09 yen, up from 154.05; 1 U.S. dollar exchanged for 0.8185 Swiss francs, up from 0.8163; 1 U.S. dollar exchanged for 1.3917 Canadian dollars, up from 1.3902; 1 U.S. dollar exchanged for 9.7773 Swedish krona, up from 9.7412.

[Cryptocurrency] Bitcoin fell by more than 4%, quoted at 75,346 yuan at press time; Ethereum dropped more than 5.7%, at $2,386.

[Crude Oil] Light crude oil futures for October delivery on the New York Mercantile Exchange rose $4.44, or 4.38%, to $105.83 per barrel; November Brent crude oil futures in London increased $3.07, or 2.9%, to $108.75 per barrel.

[Precious Metals] Spot gold dropped to $4,293.55/oz; spot silver quoted at $63.672/oz.

[Macro News]

U.S. oil shipping costs to Asia soar to a record $44.8 million. Amid concerns about supply disruptions in the Middle East, the cost of transporting U.S. crude to Asia has reached a historic high. According to the Baltic Exchange, as of Tuesday, chartering a Very Large Crude Carrier (VLCC) to transport 2 million barrels of U.S. Gulf crude to Asia cost around $44.8 million—a record high and up from $39 million the previous day. Before the outbreak of the Iran War, costs on this route were around $17.8 million. With Middle Eastern tensions disrupting energy supplies, U.S. crude has become an important alternative. Saudi Arabia’s closure of its east-to-west pipeline, which connects its east and west coasts, has further heightened market concerns over supply risks in the Strait of Hormuz. Despite the sharp rise in costs, Asian buyers are still willing to bear higher transportation costs as U.S. WTI crude still holds a pricing advantage over competing grades once it arrives in Asia. Research firm Kpler notes that six VLCCs are scheduled to load crude from the U.S. Gulf for Asia in October.

Vance says U.S.-Iran war to enter “an entirely different phase” in several months. According to reports, U.S. Vice President Vance said the U.S.-Iran war would enter “an entirely different phase” in a few months. He agreed with Trump’s view that the conflict could end after the midterm elections. Vance stated that shipping in the Strait of Hormuz is recovering, Iran’s control over the waterway is waning, and traffic has recovered to over 50% of normal levels. He said the U.S. is not conducting offensive operations but is instead responding to Iranian attacks on commercial ships. Vance explained that the conflict consists of two phases: the first phase aims to destroy Iran’s nuclear program, degrade its conventional military, and regional power projection; the second phase is to ensure Iran cannot rebuild these capabilities and to maintain regional stability. He added that the future situation depends on whether Trump continues to escalate after the midterms, or if Iran becomes more open to reaching an agreement.

CBO: U.S.-Iran war cost the U.S. $38 billion in 5 months; inflation expectations up 0.5 percentage points by next year. According to the U.S. Congressional Budget Office (CBO), the first 5 months of the Trump administration’s war with Iran cost U.S. taxpayers about $38 billion in direct costs. The CBO stated the spending primarily comes from munitions and equipment replenishment, increased flight missions, other military actions, and fuel costs. The report expects that each additional month of conflict will cost the U.S. at least $2 to $3 billion, possibly rising further if the situation intensifies. The CBO also predicted that disruptions to oil and gas flows via the Strait of Hormuz would push up U.S. inflation, estimating that early 2027’s Fed-focused inflation gauge will be 0.5 percentage points higher than previously projected, and core PCE inflation will be 0.3 points higher. Besides, the CBO said the war has depleted U.S. ammunition stocks, with some inventories needing more than five years to replenish, potentially weakening America’s ability to respond to other major conflicts. The report pointed out that, should a major conflict requiring large missile and munitions reserves occur in the future, the U.S. defense industry’s production and stockpiling capacity may face pressure.

Bassent backs Trump’s $5,000 cash handout plan, says it will not increase the budget deficit. On Tuesday, U.S. Treasury Secretary Bassent expressed support for Trump’s plan to send $5,000 checks to adult Americans if the Republicans continue to control both chambers of Congress, downplaying concerns over the plan’s costs. "I believe it’s possible to do this without impacting the budget deficit," Bassent stated. Currently, financial markets are increasingly concerned about the U.S. government’s growing debt. Bassent did not reveal how the program’s costs would be offset but said the Treasury has been working on the plan for "quite some time." He did not mention whether such payments would require Congressional approval, but if so, he indicated he would work with House Speaker Johnson to push it through. Less than a week ago, Trump promised to issue the $5,000 "dividend," with the plan expected to cost more than $1 trillion.

[Company News]

Jensen Huang: The AI industry does not need new safety regulation laws. Nvidia (NVDA.US) CEO Jensen Huang said at a Salesforce event on Tuesday that the AI industry does "not need any new laws or regulatory measures," reiterating his earlier view that the so-called trade-off between safety and speed in AI development is a "false dichotomy." Huang stated that it is entirely possible to achieve both. "Companies can proceed at their own pace until they are certain that the market will accept their products. Market forces already exist. Companies are capable of deciding not to release technologies or products that may be harmful." Earlier this week, Huang joined a live phone conversation at an event with President Trump, with both disputing recent suggestions to slow down AI development.

Amazon says partial AWS data recovery in Bahrain and the UAE hampered. Amazon (AMZN.US) Web Services (AWS) said that due to damage caused during the U.S.-Iran war, data recovery remains inaccessible for some data centers in the Persian Gulf region. According to the latest status update from AWS, data stored solely in Bahrain data centers and certain network zones in the UAE remains inaccessible. Previously, two AWS data centers in Bahrain suffered damage at the start of the conflict, exceeding the design tolerance of the service. AWS stated most customers have resumed operations via backups or migration to other countries' data centers, but one availability zone in the UAE remains inaccessible and engineers are still repairing resources in two other zones. The company expects further updates on Bahrain’s recovery early next year.

META plans to deploy new self-developed ARKE chips in the first half of next year, demonstrating the cost-saving advantage of proprietary chips. According to reports, Meta Platforms (META.US) plans to begin deploying its new self-developed ARKE chips in data centers in the first half of next year, claiming the move will save costs and energy in running AI models. The company first announced its proprietary AI chip program in 2023 and is currently testing the third-generation product, codenamed MTIA 450 or Arke. The next-generation product—codenamed 500 or Astrid—will complete its design work in about a month and is expected to be used in data centers by the end of 2027. Meta anticipates a broader adoption of the product in the future. Meta Vice President of Engineering Jiun Song said in an interview, "Each generation of chips involves higher technical risks, but performance improves significantly as well." It was reported that Meta’s Supernova Lab supports chip fine-tuning by providing insights into future AI models and their inference requirements. Song said, as a result, these chips will run AI models more efficiently than "anything Nvidia currently offers," "simply because we do so much of the engineering work ourselves."