[New York Stock Market] Semiconductor Stocks Plunge Amid Tightening Concerns and 'Export Controls'... Nasdaq Hits Lowest in 2 Years

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Major indices of the U.S. New York stock market closed lower on the 10th (local time) amid concerns over Federal Reserve (Fed) tightening while awaiting inflation data. In particular, the Nasdaq index, sensitive to interest rates, fell to its lowest level in two years due to the combined impact of a sharp drop in semiconductor stocks following export controls to China.

On the day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 29,202.88, down 93.91 points (0.32%) from the previous session. The S&P 500, focused on large-cap stocks, fell 27.27 points (0.75%) to 3,612.39, and the tech-heavy Nasdaq dropped 110.30 points (1.04%) to 10,542.10. The Nasdaq's decline this year exceeds 32%.

Among individual stocks, semiconductor stocks showed notable weakness. Following the Biden administration's official announcement last Friday to restrict exports of advanced U.S. semiconductors and equipment to China, major semiconductor stocks such as Nvidia (-3.36%), AMD (-1.08%), Qualcomm (-5.22%), and Intel (-2.02%) all fell sharply. Lam Research slid 6.43%, and Marvell dropped 4.84%.

Casino stocks also plunged as COVID-19 lockdown measures resumed in China. Wynn Resorts fell 12.25%, and Las Vegas Sands dropped 7.55%. Automakers Ford and General Motors (GM) declined 6.89% and 3.96%, respectively, after UBS downgraded their investment ratings.

Investors on the day were closely watching Fed officials' remarks, geopolitical risks surrounding the Ukraine war, and awaited the Consumer Price Index (CPI) to be released on the 13th, as well as the Q3 earnings season.

Jamie Dimon, chairman of JP Morgan Chase, known as the "Emperor of Wall Street," heightened recession concerns by stating on CNBC that "the U.S. economy will enter a recession within 6 to 9 months." He pointed out soaring inflation, steeper-than-expected interest rate hikes, unknown effects of quantitative easing (QE), and Russia's invasion of Ukraine as "very, very serious problems pressuring the U.S. and the global economy." He added, "With very serious headwinds combined, both the U.S. and global economies could be pushed into recession by mid-next year." Furthermore, he warned that the S&P 500 could fall an additional 20% from current levels, noting, "The next 20% drop will be much more painful than the first (recent 20% decline)."

The bond market was closed on Columbus Day. However, with tightening pressures mounting, U.S. Treasury yields are expected to continue rising this week.

Fed officials' comments also reinforced tightening expectations. Charles Evans, president of the Federal Reserve Bank of Chicago, emphasized, "Even if people lose jobs, the central bank's commitment to lowering inflation remains firm," adding, "Controlling inflation is the most important." Fed Vice Chair Lael Brainard said monetary policy would remain "restrictive for some time," noting, "The cumulative effects of tightening monetary policy take time to work through the economy and reduce inflation." However, she also mentioned that the Fed is considering the impact of rate hikes on both the U.S. and global economies. This suggests that risks such as Russia's war in Ukraine and China's COVID lockdowns could somewhat influence the Fed's policy stance.

Geopolitical risks surrounding Ukraine increased, pushing the dollar higher. The Dollar Index, which measures the dollar's value against six major currencies, surpassed 113. It surged to around 113.3 during the session, marking the highest level since September 29. On the same day, Russia launched indiscriminate long-range missile attacks on key locations including the capital Kyiv, in retaliation for the Crimean Bridge explosion. This resulted in more than 11 deaths and 64 injuries nationwide. The casualty count is expected to rise depending on rescue operations.

The market is also awaiting upcoming earnings. Major banks such as JP Morgan, Wells Fargo, Morgan Stanley, and Citi are scheduled to report quarterly results on the 14th. Prior to that, companies like PepsiCo and Delta are also set to announce earnings. Quarterly net profits of companies listed on the S&P 500 are expected to increase by only 2.4% compared to the same period last year. Particularly, Bank of America's (BoA) strategist Savita Subramanian emphasized that future earnings guidance is more important than Q3 results. She stated, "Guidance will be the most important," adding, "There are significant downside risks for Q4 and 2023. Investors will focus heavily on recession risks."

Oil prices fell amid profit-taking following recent sharp rises. At the New York Mercantile Exchange, November West Texas Intermediate (WTI) crude oil closed at $91.13 per barrel, down $1.51 (1.63%) from the previous session. This marks the first decline in six trading days.

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