New York Stock Market Falls on Delta Variant Concerns and Profit-Taking... Dow Down 0.11%

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] The New York stock market closed lower on the last trading day of August due to profit-taking and a decline in the consumer confidence index.

On the 31st (local time), the Dow Jones Industrial Average fell 0.11% (39.11 points), the S&P 500 dropped 0.13% (6.11 points), and the Nasdaq Composite decreased 0.04% (6.65 points) in the New York stock market.

By sector, energy, technology, and industrial stocks declined, while real estate, consumer discretionary, and telecommunications stocks rose.

On the day, the U.S. Treasury yield rose by 0.016 percentage points to 1.300%. Brent crude oil fell 0.8% to $71.64 per barrel.

Previously, all major indices had recorded gains last month. The S&P 500 rose 2.9% in August alone, marking its seventh consecutive monthly increase. This became the longest streak of gains since January 2018.

The Dow Jones also rose 1.2% for the second consecutive month, while the Nasdaq surged 4%.

Amid this bullish market, profit-taking led to the market closing lower on the day, analysts say.

Most technology companies' stock prices fell in the New York market that day. NXP, Nvidia, and AMD all struggled, and the video conferencing company Zoom plunged 17%. Zoom had previously reported earnings that fell short of expectations in its earnings announcement the day before.

Additionally, with the spread of the Delta variant, there is a possibility of additional lockdown measures, which investors are viewing cautiously as a short-term risk.

Investors are focusing on the employment report to be released later this week, based on Federal Reserve Chairman Jerome Powell's remarks about the possibility of tapering within the year, while emphasizing the need to monitor employment data further.

Reflecting this sentiment, the U.S. consumer confidence index last month recorded 113.8, the lowest since February.

Langas said, "More people are canceling trips," and added, "Consumers seem to be gradually reducing their spending."

The strong market performance in August was largely due to most companies exceeding earnings expectations in the second quarter. Additionally, the Fed's quantitative easing policy helped boost stock prices through abundant liquidity.

In particular, despite Chairman Powell's indication of tapering, the market cheered, interpreting it as a resolution of uncertainty rather than a tightening shock.

Powell stated, "If the economy develops broadly as expected, it may be appropriate to begin reducing asset purchases within this year." However, he did not provide a specific tapering schedule.

Peter Langas, strategist at Bessemer Trust, said, "The Fed is confident that the economy will show a strong recovery despite the spread of the Delta variant."

Powell's addition of a 'caveat' that he would monitor the Delta variant's impact on employment helped ease market concerns.

Powell expressed the view that the Delta variant is unlikely to significantly worsen economic conditions, but also left a 'loophole' by stating that if the Delta variant hampers the economy, especially employment recovery, the tapering schedule could be delayed.

This content was produced with the assistance of AI translation services.