[New York Stock Market] Tech Stock Rally and Market Bottom Theory Lead to Gains... Nasdaq Up 1.58%

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Major indices of the U.S. New York stock market closed higher on the 20th (local time), buoyed by a rally in tech stocks and the spread of the market bottom theory. The earnings of companies including Netflix exceeded Wall Street expectations, lending support to the market bottom theory that the prolonged downtrend may have hit its lowest point.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 31,874.84, up 47.79 points (0.15%) from the previous session. The S&P 500, centered on large-cap stocks, rose 23.21 points (0.59%) to 3,959.90, and the tech-heavy Nasdaq index closed at 11,897.65, up 184.50 points (1.58%). The three major indices showed their highest levels since early June.

By sector, IT and consumer goods led the gains. Netflix’s stock rose 7.36% after it reported earnings that beat expectations following the previous day’s market close. Competing streaming companies Disney (+3.75%), Paramount (+3.83%), and Roku (+6.91%) also rose together.

As the U.S. Senate began serious discussions on the semiconductor support bill for a vote, semiconductor stocks such as Nvidia (+4.80%), AMD (+4.13%), and Qualcomm (+2.94%) showed strength. Tesla, which is about to release its earnings, closed the regular session up 0.80%. Energy company Baker Hughes slid more than 8% after forecasting worsening demand over the next 18 months.

Investors are closely watching corporate earnings and earnings forecasts amid ongoing recession concerns. As of the morning of this day, about 12% of S&P 500 companies had reported earnings. According to FactSet, 68% of those companies reported earnings that exceeded market expectations.

In particular, the market appears eager to see through second-quarter earnings how companies have been affected by the highest inflation in over 40 years and economic slowdown concerns, and how they are coping. Starting with financial stocks, earnings that exceeded initial expectations have been released one after another, spreading the so-called stock bottom theory. The smaller-than-expected subscriber decline reported by Netflix, which announced earnings the previous day, also helped improve investor sentiment.

After the market closes today, Tesla and United Airlines will release their earnings. Art Hogan, chief market strategist at investment bank B. Riley FBR, said, "Inflation expectations have decreased, and so far the earnings season has been better than feared," adding, "Now risk appetite (for asset investment) is flowing in." The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street’s ‘fear index,’ fell more than 2% from the previous session, hovering around the 23 level.

In the New York bond market, the yield on the U.S. 10-year Treasury note rose to around 3.03%. The 2-year yield remained above the 10-year yield at about 3.24%, continuing the inversion phenomenon. The inversion of short- and long-term yields is generally interpreted as a precursor to a recession.

Housing data released on this day confirmed that the U.S. housing market is rapidly cooling due to soaring inflation and rising mortgage rates. According to the National Association of Realtors (NAR), existing home sales in June fell 5.4% from the previous month and 14.2% from the same month last year, totaling 5.12 million units. This marks the fifth consecutive month of decline and is well below market expectations (5.35 million units). Excluding the pandemic period, this is the lowest level since January 2019.

Oil prices fell for the first time in four trading days on news of a significant increase in gasoline inventories. On the New York Mercantile Exchange, August West Texas Intermediate (WTI) crude oil prices closed at $102.26 per barrel, down $1.96 (1.88%) from the previous day.

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