Chinese ADRs dropped again in overnight trading as traders remained wary of the rapid gains in recent weeks. YINN fell 4%; KE Holdings fell 3%; Tencent Music, NetEase, PDD Holdings, Li Auto, Alibaba, and XPeng fell 2%; iQiyi fell 1%; JD.com and Bilibili fell 0.7%; NIO fell 0.6%.

Shares of major Chinese tech and consumer stocks tumbled on Thursday. Direxion Daily FTSE China Bull 3X Shares (YINN) fell 9%; NIO fell 9%; XPeng fell 7%; Bilibili and Tencent ADR fell 5%; iQiyi, Alibaba, JD.com, Baidu, and Trip.com fell 4%; Li Auto fell 3%; NetEase fell 2%. While PDD Holdings rose about 4% after earnings.

The across-the-board move indicates that the declines had to do with Chinese stocks broadly and not individual stock news. Most likely, the downdraft was caused by disappointment over action -- or rather inaction -- by China's central bank. In addition, a Wall Street analyst issued a cautious note on Chinese stocks last night after a huge year-to-date rally, which may have encouraged some profit-taking.

China's central bank held rates steady yestoday, which may have been a disappointment.

Meanwhile, analysts at Bank of America cautioned that a correction could be coming for Chinese stocks.