[New York Stock Market] Broad Decline Amid Earnings Report Caution... Nasdaq Down 2.26%

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Major indices on the U.S. New York Stock Exchange closed lower on Monday, the 11th (local time), amid heightened caution ahead of the corporate earnings season.

On the day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average fell 164.31 points (0.52%) from the previous session to close at 31,173.84. The S&P 500, centered on large-cap stocks, dropped 44.95 points (1.15%) to 3,854.43, while the tech-heavy Nasdaq fell 262.71 points (2.26%) to close at 11,372.60.

Except for the utilities sector, most stocks showed weakness. The decline in technology stocks was particularly notable. Tesla fell 6.55% from the previous close. Meta (-4.68%), Nvidia (-4.33%), Microsoft (-1.16%), and Apple (-1.46%) also slid together. Twitter plunged more than 11% after Elon Musk, Tesla's CEO, declared he would terminate the acquisition deal. Zoom Video's drop also approached 10%.

Casino stocks were also hit hard as Macau was closed for a week due to the spread of COVID-19 in China. Wynn Resorts fell 6.46%, and Las Vegas Sands dropped 6.31%. Adam Krisapuli of Vital Knowledge said, "The COVID-19 headwind is not just a phenomenon in China," adding, "While lockdown risks in the U.S. and the European Union (EU) remain low, confirmed cases are increasing worldwide."

Banks such as JPMorgan Chase (-1.31%), Wells Fargo (-0.97%), and Morgan Stanley (-1.19%), which are scheduled to report earnings this week, also showed weakness. Energy stocks including Marathon Oil (-1.84%), Chevron (-0.88%), and Schlumberger (-2.77%) were sluggish amid falling international oil prices.

Investors are closely watching the corporate earnings reports starting this week for the second quarter. As the central bank, the Federal Reserve (Fed), continues its aggressive tightening to curb soaring inflation, corporate earnings will provide a gauge of the extent of economic slowdown. In particular, the earnings of major companies are expected to serve as an opportunity to confirm inflation-driven earnings shocks or the degree of consumer spending contraction.

This week, earnings announcements begin with PepsiCo on the 12th and Delta on the 13th. Later in the week, banks such as JPMorgan Chase, Morgan Stanley, Wells Fargo, and Citigroup will release their results.

Tim Lesko of Mariner Wealth Advisors said, "It's about future economic expectations," adding, "Revenue announcements are not important. The discussion is about how to forecast future business." Greg Basuk, CEO of AXS Investments, also stated, "As recession fears pressure the market, we are watching earnings to find greater clues about the health of U.S. companies and the overall economy."

In the New York bond market on the day, the yield on the U.S. 10-year Treasury note fell to around 2.98%. This came as the market digested last week's better-than-expected employment report and awaited this week's inflation data. The 2-year yield remained in the 3% range, continuing the inversion of short-term yields exceeding long-term yields. Since the inversion of the yield curve is generally considered a signal of an economic recession, market concerns persist.

On the same day, Goldman Sachs once again lowered its forecast for second-quarter GDP growth to 0.4%. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's "fear gauge," rose more than 6% from the previous session, hovering around the 26 level.

Investors are also awaiting the June Consumer Price Index (CPI) to be released on the 13th. Following the earlier employment report, the Fed's giant step (0.75 percentage point hike) is virtually certain, and the key question is whether there will be confirmation that inflation has peaked. Currently, the market expects the June CPI to rise 8.8% year-over-year, exceeding May's increase of 8.6%. The University of Michigan's consumer sentiment index report will also be released on the 15th.

Oil prices fell due to China's COVID-19 lockdown measures. On the New York Mercantile Exchange, August West Texas Intermediate (WTI) crude oil closed at $104.09 per barrel, down 70 cents (0.67%) from the previous session.

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