[New York Stock Market] Tech Stocks Bought at Low Prices Ahead of CPI... Only Nasdaq Rises

[Asia Economy New York=Special Correspondent Joselgina] Major indices of the U.S. New York stock market closed mixed on the 9th (local time) ahead of this week's release of key indicators such as the Consumer Price Index (CPI). Amid expectations that inflationary pressures may ease, bargain buying led by tech stocks including Tesla was confirmed. The dollar showed weakness.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average fell 112.96 points (0.34%) from the previous close to finish at 33,517.65. The S&P 500 index, centered on large-cap stocks, dropped 2.99 points (0.08%) to 3,892.09. Meanwhile, the tech-heavy Nasdaq index closed up 66.36 points (0.63%) at 10,635.65.

[Image source=Reuters Yonhap News]

After starting the week’s first trading day with gains, the New York stock market turned mixed. The Dow, composed of blue-chip stocks, faced downward pressure led by pharmaceutical stocks such as Merck and Johnson & Johnson. Only the Nasdaq index maintained gains, supported by bargain buying in tech stocks. Among the 11 sectors of the S&P 500, the rally in tech stocks (+1.09%) was prominent. In contrast, healthcare (-1.66%) and consumer staples (-1.03%) sectors underperformed.

Among major stocks, Tesla, which had sharply declined over the past year, rose 5.93% from the previous close. Nvidia increased by 5.18%, and Amazon jumped 1.49%. Zillow rose 8% after Bank of America (BoA) upgraded its investment rating by two levels and indicated improved growth prospects. Goldman Sachs shares rose 1.41% on news of large-scale layoffs planned this week. Conversely, athleisure company Lululemon fell nearly 10% after announcing a decrease in total margin for the fourth quarter.

Chris Zaccarelli, Chief Investment Officer at Independent Advisor Alliance, said, "At least for 2023, the market is much more optimistic than it was at the end of 2022," adding, "We are seeing a return to optimism about what could happen in the stock market this year."

Investors are awaiting the release of the December CPI on the 12th, as well as corporate quarterly earnings reports starting with the banking sector.

Expectations are growing that inflationary pressures may ease further ahead of the key CPI release. Following a slight slowdown in wage growth reported in last week’s December employment report, the New York Federal Reserve Bank’s released 1-year ahead expected inflation rate (5%) also fell to its lowest level since July 2021.

CNBC reported, "Traders are adding bets that inflation may ease." Currently, Wall Street’s forecast for the December CPI year-over-year increase is 6.6%, down from 7.1% the previous month. Chris Larkin, Trading Director at E*TRADE, said, "Inflation and the Federal Reserve’s response, which moved the market last year, will continue to influence this year as well."

However, Mary Daly, President of the San Francisco Fed, said in an interview with the Wall Street Journal (WSJ) that it is too early to declare victory in the war against inflation and that the Fed will raise the benchmark interest rate above 5%.

This week marks the start of the earnings season with major banks such as JPMorgan Chase, Bank of America (BoA), and Wells Fargo reporting results. According to FactSet, net earnings of S&P 500 listed companies for the fourth quarter of last year are estimated to decline by 4.1% compared to the same period the previous year. This would mark the first negative growth since the third quarter of 2020.

U.S. Treasury yields fell. In the New York bond market, the 10-year yield dropped to around 3.51%. The 2-year yield, sensitive to monetary policy, briefly hit 4.185% during the session before narrowing its losses. The dollar showed weakness. The Dollar Index, which measures the dollar’s value against six major currencies, fell about 0.6% from the previous close, trading around the 103 level.

Oil prices rose for the third consecutive trading day on expectations of demand recovery in China. On the New York Mercantile Exchange, February delivery West Texas Intermediate (WTI) crude oil closed at $74.63 per barrel, up 86 cents (1.17%) from the previous close.

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