US stocks fall, 10-year yield hits 2007 high; A-share market faces lower open but selling pressure eased

Source: Big Steward Observations Data as of: Early morning, September 24 Note: Recent daily strategies have largely aligned with market trends. The author is on a business trip in Hangzhou, visiting and researching the listed company JNBY. It is notable—and somewhat surprising—that this brand apparel company posted growth in both revenue and profit in the first half of this year, with e-commerce sales also rising. The brand targets mid-to-high-end consumers, and the company's fundamentals are solid. Behind this dual growth, the author sees a clear picture: this is an era of consumption divergence. Not all businesses are struggling; opportunities exist, but they require effort and实干 (practical action).

Despite being on the road, the author continues the regular early-morning review and outlook.

Executive Summary

Overnight, U.S. stocks fell sharply, U.S. Treasury yields surged, and the probability of a Fed rate hike in October rose above 60%. A lower open for A-shares today is inevitable. However, today is the last trading day before the Mid-Autumn Festival. The "cash-out selling pressure" has already been released yesterday, and with the central bank's 800 billion yuan MLF providing support, there is no need for panic—nor for heavy positions.

Core Judgments:

1. Yesterday (September 23) was the real "cash-out selling day." The selling pressure has been released, making today relatively stable. Yesterday, A-shares saw a broad decline with shrinking volume—turnover dropped sharply from 2.14 trillion to 1.78 trillion yuan (a decrease of 370.5 billion). Major funds saw net outflows of 39.5 billion, super-large orders outflowed 15.9 billion, while small orders absorbed 36.8 billion. Investors who wanted to withdraw cash before the holiday sold yesterday. Today (September 24), the last trading day before Mid-Autumn, selling pressure is significantly reduced. This is the first reason why a sharp drop is unlikely today.

1. Overnight, three negative factors hit U.S. stocks, pressuring tech stocks at the open, but A-shares follow their own logic. The Nasdaq fell 1.13%, the 10-year U.S. Treasury yield rose above 5.1% (a high not seen since 2007), Fed Governor Barr struck a hawkish tone ("may need further rate hikes"), and the probability of an October rate hike surged from 53% to over 60%. These three factors are a real drag on high-valuation tech and growth stocks. However, A-shares had already priced this in yesterday: optical modules (Zhongji Innolight -0.56%, Eoptolink net outflow of 773 million), semiconductor equipment were already adjusting, while memory stocks showed internal divergence (Micron fell in the U.S., but Biwin Storage saw net inflows). The U.S. stock decline is a "secondary confirmation" for A-share tech, not a "new shock."

1. The materials price-increase chain (PCB/CCL/copper foil) is the only direction with "solid catalysts," but it is already at relatively high levels—caution is needed when chasing. Yesterday, CCL and PET copper foil bucked the trend, driven by visible price adjustment letters: Hongruixing raised prices by 10%, Kingboard announced its 7th price hike this year, and China Jushi raised electronic yarn prices by 15-20%. This is the only direction that meets all three conditions: "price resilience + net capital inflows + solid catalysts." However, Aohong Electronics has already hit 7 limit-ups in 9 days, and Daya Shengxiang has 4 consecutive limit-ups. The value of the price-increase chain lies in mid-to-upstream materials and board manufacturers, not in the stocks with the biggest gains. Chasing at high levels means becoming exit liquidity for others.

1. The key variable next week is U.S.-China relations—the outcome will be known tonight or after the holiday. The three trading days before the holiday have always been about "expectations." Today (September 24) is the last trading day for A-shares. The full list of outcomes from the U.S.-China meeting will only become clear after it concludes (September 25) or even later. A-shares will only fully price this in after the holiday on September 28. There may be some capital buying into the close today, betting on positive meeting outcomes after the holiday, but this is speculation, not certainty—light positions for the holiday, leaving the answer for after the break.

I. A-Share Review Yesterday: Broad Decline with Shrinking Volume—"Pre-Holiday Risk Aversion," Not a Trend Reversal

Yesterday (September 23, Wednesday) can be summarized in one sentence: indices fell slightly, stocks declined broadly, volume contracted sharply, and the main theme shifted.

Three Key Points:

• Main theme shifted: The media sector, which led gains the day before, became a risk point yesterday (-2.55%, CITIC Press -12.36%, multiple stocks hitting limit-down). It was replaced by the "materials price-increase chain"—CCL, PET copper foil, and glass substrates bucked the trend and led gains. Capital moved from "speculating on policy themes" to "speculating on price-increase catalysts," signaling a further contraction in risk appetite.

• "Major funds exit, retail investors take over" structure reappeared: Super-large orders saw net outflows of 15.9 billion, while small orders saw net inflows of 36.8 billion. This is the second time this structure has appeared since September 22. For two consecutive days, large funds have been cashing out at high levels, with a clear intention to "lock in profits before the holiday."

• Continued divergence within tech: Optical modules (Zhongji Innolight turnover fell from 22.3 billion to 13.6 billion, Eoptolink net outflow of 773 million) and memory (Micron fell in the U.S., but Biwin Storage saw net inflows of 620 million) showed divergence. Meanwhile, the "price-increase chain" (PCB/CCL/copper foil) attracted capital against the trend. Money hasn't left tech; it has simply shifted within tech from "valuation-driven" to "price-increase-driven."

Author's view: Yesterday was a day of "pre-holiday risk aversion + main theme shift," not a trend reversal. However, the three signals—volume contraction of 370.5 billion, a 3x increase in limit-down stocks, and a first-to-second board success rate of only 8%—indicate that short-term sentiment has entered the mid-stage of a retreat. Aggressive moves are not advisable on the last day before the holiday.

II. Overnight U.S. Stock Review: Three Negative Factors, U.S. Treasury Yields Are the Core

Last night (U.S. Eastern Time, September 23, Wednesday), all three major U.S. indices fell: Nasdaq -1.13%, S&P 500 -0.75%, Dow -0.68%. The core issue is not the index declines but U.S. Treasury yields—the master switch for global risk assets.

Three Key Signals:

• U.S. Treasury yields are the master switch: The 10-year yield at 5.1% and the 5-year yield breaking 5% are the highest since 2007. High rates are a "discount rate killer" for long-duration tech and growth stocks. Last night, U.S. optical communications (SanDisk, Corning, Coherent, SK Hynix all fell over 3%), memory (Micron fell over 2%), and semiconductors (Nvidia concept -2.93%, CPO -1.28%) all sold off.

• Oil price rebound was the trigger: Iran's president made a强硬 (hardline) statement at the UN General Assembly, saying "the Strait of Hormuz will not reopen." Brent crude rose 5% to $103.7, and WTI rose 3% to $92.69. The transmission chain: oil price rebound → rising inflation expectations → stronger rate hike expectations → U.S. Treasury yield surge. This was the core logic last night.

• U.S. PMI exceeded expectations, "adding fuel to the fire": The September composite PMI came in at 58.4, the highest since 2021, with input costs rising at the fastest pace in four years. The stronger the economy, the more confident the Fed is to raise rates, and the more the market fears "higher rates for longer."

Author's view: The 10-year U.S. Treasury yield breaking above 5.1% is a key signal. Its transmission to A-shares is: pressuring high-valuation growth stocks (tech, optical modules, memory), reinforcing the "reduce positions before the holiday" sentiment, and increasing volatility for rate-sensitive sectors after the holiday. However, A-shares have the central bank's "independent" policy, so U.S. Treasury yields are an "external pressure," not an "internal logic."

III. Today's Core Contradiction: U.S. Stock Plunge vs. Pre-Holiday Selling Pressure Already Released

The key question today: Will A-shares follow the U.S. stock decline?

Author's view: A lower open is unavoidable, but panic is unnecessary.

Two Reasons:

Reason 1: Yesterday was the cash-out day; selling pressure has been released. The Mid-Autumn Festival market closure is September 25. Under the T+1 settlement system, selling yesterday (September 23) allows cash withdrawal today (September 24). Therefore, investors who wanted cash before the holiday sold yesterday. The sharp drop in turnover by 370.5 billion and major fund outflows of 39.5 billion represent the concentrated release of this "cash-out selling pressure." Today (September 24) is the last trading day. Those remaining are either trapped investors or those holding positions for post-holiday gains. Selling pressure is significantly reduced.

Reason 2: The central bank's 800 billion yuan MLF provides support. Today, the central bank conducted an 800 billion yuan 1-year MLF operation, clearly signaling cross-quarter liquidity support. Combined with the previously announced overnight reverse repo operations from September 28 to October 8 (up to 1 trillion yuan per day), liquidity during the "double holiday" period is supported, capping the downside for indices.

However, excessive optimism is also unwarranted:

The U.S. stock decline + U.S. Treasury yields at 5.1% + hawkish Fed will pressure tech stocks (optical modules, memory, semiconductors) at the open. Valuation repair for high-growth stocks will continue to be suppressed. Today's基调 (tone) is: "lower open, volatile trading, defensive posture, light positions for the holiday."

IV. Macro Background: Three Events Set the Tone for Today

(A) U.S.-China Relations: Outcome Likely Known Tomorrow Night or After the Holiday

Today is the last trading day for A-shares. Key point: The outcome will likely be clear tomorrow night or after the holiday on September 28. Today, the market trades on "expectations." Multiple funds have already been positioning for meeting outcomes. However, "buy the rumor, sell the fact"—the closer to the outcome, the more caution is needed against a "sell the news" reaction.

(B) Fed + U.S. Treasury Yields: Probability of October Rate Hike Breaks 60%

Fed Governor Barr struck a hawkish tone ("may need further rate hikes"), pushing the probability of an October rate hike from 53% to over 60%. This is a medium-term constraint, not a short-term panic—but it will reinforce the "reduce positions before the holiday" sentiment and compress valuation space for October-December. For A-shares, the key focus is the U.S. August PCE price index—released tonight (September 24 U.S. time), but A-shares will be closed for the Mid-Autumn holiday and can only price it in after the holiday on September 28. This is the first and most important external variable after the holiday. Also watch the October 27-28 FOMC meeting.

(C) Two Industry Catalysts: Domestic Substitution + Communications Network Construction

Two industry catalysts worth noting:

• Domestic survey of Broadcom switches: Reports indicate a domestic survey of Broadcom switches in state-owned data centers (some server rooms have up to 90% Broadcom). Huawei, H3C, and Ruijie are named as potential substitutes. This is a signal for network-layer domestic substitution, benefiting related domestic substitution listed companies.

• MIIT "moderately超前布局 (forward-looking deployment) of next-generation communications network": Dual 10G upgrade + low-orbit satellite internet + computing-network collaboration. This benefits optical modules, switches, IDC, and satellite internet. This is a top-level "15th Five-Year Plan" blueprint, but implementation takes time—don't chase short-term highs.

V. Today's Main Themes and Risks

Main Theme Ranking (Last Day Before Holiday: Focus on Defense + Dip-Buying)

First Tier (Solid catalysts, but high levels—watch for profit-taking):

• Materials price-increase chain (PCB/CCL/copper foil/glass substrates): The only direction with "price resilience + net capital inflows + solid catalysts." However, Aohong Electronics is already at 9 limit-ups in 7 days—very high. Only look for low-position catch-up plays (mid-to-upstream materials, board manufacturers). Do not chase high-level limit-up stocks.

• Domestic computing power/switches: Broadcom survey + communications network construction benefit domestic substitution stocks. Policy-driven; buy on dips, don't chase highs.

Second Tier (Low-valuation defense, reduce volatility before holiday):

• Pharma/innovative drugs/CRO: The only primary industry that closed in the green yesterday (+0.17%). CRO and biological products showed partial repair. Defense + growth dual attributes. Wait for pullbacks to buy.

• Banks/public utilities/high dividend: Central bank MLF support + pre-holiday risk aversion. Banks, Yangtze Power, and other low-valuation defensive positions serve as core holdings.

Third Tier (Event-driven, pre-holiday speculation):

• Meeting outcome speculation: Rare earths (bargaining chips), export chain (tariff cuts), tech cooperation. This is what may be bought into the close today, betting on "post-holiday expectations." Participate lightly; do not take heavy positions.

Directions to Avoid:

• Media/gaming/AI applications: Already crashed yesterday. The retreat is not over. Do not try to catch the falling knife.

• High-level limit-up stocks/speculative plays: Aohong Electronics (9 days, 7 limit-ups), Daya Shengxiang (4 limit-ups). The chain of 4th, 5th, and 6th limit-ups is already broken. Chasing highs is a sure way to become exit liquidity.

Core Risks

• U.S. stock decline + U.S. Treasury yields at 5.1%: Tech stocks under pressure at the open. High-valuation growth continues to be suppressed.

• High-level materials chain profit-taking: PCB/CCL led gains yesterday. If they open higher today, it's a profit-taking opportunity, not an entry point.

• Pre-holiday volume contraction: Turnover may further shrink to 1.6-1.7 trillion. Hot sectors will have poor sustainability.

• Meeting "sell the news": Outcome known tomorrow night/after holiday. Capital buying into the close today may exit before the outcome is announced.

• "Major funds exit, retail investors take over" structure: Two consecutive days of distribution. Pre-holiday capital flows are weak.

VI. Today's Trading Strategy

Overall Strategy: Last Day Before Holiday—Light Positions, No Chasing, No Heavy Positions, No Panic

Core Discipline: Today is the last trading day before Mid-Autumn. Prioritize "safety through the holiday" over "one more day of gains." A lower open is no cause for panic (selling pressure has been released), but heavy position speculation is also unwise (external uncertainties).

Three Scenarios

Scenario 1: Lower open, volatile trading, shrinking volume. Impacted by the U.S. stock decline, the market opens lower, but with selling pressure released and central bank MLF support, it trades in a narrow range with low volume all day. Action: Do not chase, do not take heavy positions. Holders reduce flexible positions; those without positions keep light positions for the holiday.

Scenario 2: Lower open, intraday rebound, close buying on meeting hopes. After a lower open, some capital buys into the close, betting on "positive meeting outcomes after the holiday," narrowing losses or even turning positive. Action: This is "betting on post-holiday" speculation. Only participate lightly in high-conviction directions (domestic computing power, rare earths). Do not take heavy positions.

Scenario 3: Volume-driven decline, testing 3900. If the U.S. stock decline transmission and materials chain profit-taking coincide, the index may test the 3900 integer level. Action: 3900 not breaking is "the last washout before the holiday." Do not panic, but do not rush to buy the dip either. Wait for clarity after the holiday.

Five Disciplines

1. Do not chase: Any sector opening higher today is a profit-taking opportunity, not an entry point. Especially yesterday's leaders (materials chain—PCB/CCL). A higher open is a signal to moderately reduce positions.

1. Light positions for the holiday: Control total position size. Margin positions must be reduced. The Mid-Autumn + National Day double holiday means cross-holiday risk exposure + external uncertainties. Light positions are the way to go.

1. Avoid high levels: Media has already crashed. Materials chain is at high levels. Limit-up heights are compressing. Chasing highs means becoming exit liquidity.

1. Tech: Buy on dips, don't chase highs: Optical modules and memory are under pressure from U.S. stocks and will likely open lower today. However, domestic computing power (switches, CPUs) has policy catalysts. Wait for pullbacks to buy. If they open significantly higher, do not chase.

1. Meeting: Beware of "sell the news": Outcome known tomorrow night/after holiday. Capital buying into the close today may exit before the outcome. Have an exit plan for event-driven positions in advance.

Position Strategy

• Total position: Control size. Light positions for the holiday.
• Yesterday (cash-out day) selling pressure has been released. No need to panic-clear today, but also no need to take heavy speculative positions.
• Wait until after the holiday (September 28) for the meeting outcome and U.S. PCE data to become clear before deciding whether to go on offense or continue defense.

VII. Author's Comprehensive View: Last Day Before Holiday—Don't Do These Three Things

Yesterday's broad decline with shrinking volume was the second reminder from big money: capital is flowing out, and retail investors are taking the other side. Today is the last trading day before Mid-Autumn. Overnight, U.S. stocks fell sharply, U.S. Treasury yields hit 5.1%, and the Fed turned hawkish. It looks like a storm is brewing.

But the author has three honest points:

1. Don't panic. Yesterday was the cash-out day. Those who wanted to sell have already sold. Selling pressure is lighter today. The central bank's 800 billion yuan MLF provides support. While a sharp drop is possible, it's not highly probable.

1. Don't take heavy positions. The meeting outcome won't be known until tonight. U.S. stocks, U.S. Treasury yields, and oil prices all carry too much uncertainty over the holiday. Taking heavy positions into the holiday is leaving your fate to luck.

1. Don't chase highs. The materials price-increase chain is the only direction with solid catalysts, but it's already at 9 limit-ups in 7 days. Chasing now means becoming exit liquidity for others. The real opportunity lies after the holiday—once the meeting outcome is clear, PCE data is known, and volume returns. Then the direction will be clear.

In one sentence: Last day before the holiday—light positions, no chasing, no panic. Keep your mindset calm. Leave the answer for after the holiday. Mid-Autumn reunion is more important than one day's gains or losses.

Big Steward, see you in the market.

VIII. Today's Interactive Question

Today (September 24) is the last trading day before Mid-Autumn and also marks the second anniversary of the "924 rally." Overnight, U.S. stocks fell sharply, and U.S. Treasury yields broke above 5.1%. Yet the meeting outcome and the central bank's 800 billion yuan MLF also give reason for hope. For this Mid-Autumn + National Day double holiday, are you "holding cash" or "holding stocks through the storm"?

Share your choice and reasoning in the comments—are you planning to go all cash to avoid external risks, or keeping some positions to bet on positive meeting outcomes after the holiday? The author will randomly select comments to discuss holiday position strategies. Give a like and share so more friends can think through: "Where should my money be during this long holiday?"

Disclaimer: This report is based on public information and market research analysis. It does not constitute any investment advice or serve as a basis for investment decisions. Any sectors or stocks mentioned are solely for industry logic analysis and do not constitute buy or sell recommendations. Market risk exists; invest with caution.

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