[New York Stock Market] Big Tech Earnings Awaited, Rising Around 1%... Chinese Companies Plunge

[Image source=AP Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Major indices of the U.S. New York stock market closed higher on Monday, the 24th (local time), as investors awaited this week's earnings reports from major tech companies. However, Chinese stocks listed on the New York Stock Exchange plunged double digits amid rising regulatory concerns following the confirmation of Xi Jinping's third term as China's president.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 31,499.62, up 417.06 points (1.34%) from the previous session. The S&P 500, which focuses on large-cap stocks, rose 44.59 points (1.19%) to 3,797.34, and the tech-heavy Nasdaq index closed at 10,952.61, up 92.90 points (0.86%).

By sector, 9 out of the 11 sectors in the S&P 500 ended the day higher. Leading tech stocks Microsoft and Alphabet rose 2.12% and 1.37%, respectively, ahead of their earnings releases scheduled for the 25th. Apple also jumped 1.48%. Nvidia (+1.07%), Intel (+0.78%), and Qualcomm (+0.55%) were also on the rise. However, Tesla, which announced some vehicle price cuts in China, fell more than 1% amid concerns over weakening electric vehicle demand. Tesla's stock price even dropped as much as 7.4% intraday to $198.59.

Chinese stocks listed in the U.S. were also hit hard. The establishment of Xi's absolute power system has heightened investment uncertainties, especially regarding regulatory tightening centered on the tech sector, leading to a wave of sell-offs. The Invesco Golden Dragon China ETF (PGJ), which tracks Chinese stocks listed in the U.S., fell 14.50% compared to the previous session. Among individual stocks, Alibaba plunged 12.51%, Pinduoduo dropped 24.61%, and Li Auto (-17.39%) and NIO (-15.70%) also fell double digits.

Investors are awaiting earnings reports from major companies. This week is a so-called "super week," with earnings announcements pouring in from big tech companies such as Apple, Alphabet, Amazon, and Microsoft. About one-third of S&P 500 companies are scheduled to report earnings during the week.

According to FactSet, 20% of S&P 500-listed companies had reported earnings as of last week, with 72% of those companies beating market expectations for earnings per share (EPS). However, this is lower than the five-year average. Terry Sandven, Chief Equity Strategist at U.S. Bank, said, "Everything is about earnings," but added, "Frankly, it's at or below expectations." Economic media CNBC predicted that investors would weigh earnings and guidance as the earnings season gets underway.

Released economic indicators were mixed. The Chicago Federal Reserve Bank reported that the September National Activity Index was 0.10, unchanged from the previous month, indicating growth above the long-term average. On the other hand, the preliminary October Manufacturing Purchasing Managers' Index (PMI) compiled by S&P Global fell to 49.9. A reading below the baseline of 50 indicates contraction. The preliminary Services PMI also showed contraction at 46.6.

On the same day, Treasury Secretary Janet Yellen stated at the Securities Industry and Financial Markets Association (SIFMA) annual meeting, "We are closely monitoring the financial sector as market volatility increases due to international developments." Regarding inflation, she said, "It is very high. The government's top priority is to curb inflation."

Investors are also watching the Federal Reserve's pace of interest rate hikes to control inflation ahead of the November FOMC meeting. A 0.75 percentage point hike in November is widely expected, and the key question is whether the Fed will slow the pace starting in December as the market anticipates. However, this week is a blackout period with no public speeches from Fed officials, making it difficult to find new hints. The U.S. third-quarter Gross Domestic Product (GDP) data will be released on the 17th.

In the New York bond market on this day, the yield on the U.S. 10-year Treasury note rose to 4.231%. The 2-year yield, sensitive to monetary policy, also increased to 4.498%. However, the rise was not as sharp as last week, as concerns about monetary tightening eased somewhat. Financial market instability from the UK also eased after former Treasury Secretary Rishi Sunak was elected as the new UK Prime Minister. Michael Schumacher of Wells Fargo said, "Treasury yields have surged over the past few weeks. It seems excessive." However, he added that it would not be surprising if the 10-year yield approached 5% by year-end due to continued Fed tightening.

The dollar remained steady. The Dollar Index, which measures the dollar's value against six major currencies, hovered around 112.

Tony Dwyer, Chief Strategist at Canaccord Genuity, pointed out that the future direction of the New York stock market "depends on interest rates." Marco Kolanovic, Chief Global Market Strategist at JP Morgan, said regarding the sharp drop in Chinese stocks that considering the prospects for growth recovery, gradual easing of COVID-19 restrictions, and monetary and fiscal stimulus, the sell-off on this day could be a buying opportunity.

Oil prices fell slightly after four trading days. At the New York Mercantile Exchange, December West Texas Intermediate (WTI) crude oil closed at $84.58 per barrel, down 47 cents (0.55%) from the previous session.

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