NY Stock Market Slumps on Manufacturing Weakness and Tapering Concerns... Tesla Recovers to $700

by Paek Jongmin

Published 03 Aug.2021 07:14(KST)

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] Major indices on the New York Stock Exchange closed mixed amid overlapping concerns over weak manufacturing conditions and early tapering. Tesla's stock price recovered to the $700 range for the first time since April.

On the 2nd (local time), the Dow Jones Industrial Average fell 97.31 points (0.28%) to 34,838.16, the S&P 500 index dropped 8.10 points (0.18%) to 4,387.16, and the Nasdaq index rose 8.39 points (0.06%) to 14,681.07.

On that day, the major indices could not escape the impact of the weak manufacturing Purchasing Managers' Index (PMI) announced shortly after the market opened.

The manufacturing PMI released by ISM (Institute for Supply Management) was 59.5, falling short not only of the market expectation of 60.8 but also the previous month's 60.6.

Following the slowdown in the US second-quarter Gross Domestic Product (GDP), the confirmation of a decline in the manufacturing PMI further spread concerns about a slowdown in the economic recovery.

Concerns over economic slowdown pushed the US Treasury yield down to 1.15% during the session. Investments flowed into safe assets instead of risk assets.

While the gains of major indices were slowing, Federal Reserve (Fed) Governor Christopher Waller dropped a bombshell near the end of the trading session.

In an interview with CNBC, Governor Waller said that if employment growth in August and September exceeds 800,000, the Fed is expected to start asset purchase tapering in October. This implies that an announcement regarding tapering is expected at the September FOMC meeting.

Among individual stocks, airline stocks notably declined. Power semiconductor company Onsemi surged 14%. Qualcomm fell 0.6% after Google announced it would use its own developed chips instead of Qualcomm chips in its Pixel smartphones.

Electric vehicle maker Tesla rose 3.2%, buoyed by strong sales from Chinese electric vehicle companies such as Nio and Li Feng. Tesla's stock price rose for four consecutive days, jumping 13%.