[New York Stock Market] Declines Awaiting US CPI... Nasdaq Down 1.17%

The three major indices of the U.S. New York stock market all closed lower on the 9th (local time) as investors awaited inflation indicators such as the Consumer Price Index (CPI) to be released the following day.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average fell 191.13 points (0.54%) from the previous session to close at 35,123.36. The S&P 500, which focuses on large-cap stocks, dropped 31.67 points (0.7%) to 4,467.71, while the tech-heavy Nasdaq fell 162.31 points (1.17%) to close at 13,722.02.

Within the S&P 500, stocks related to technology, communications, finance, and discretionary consumer goods declined, while energy, real estate, and utilities sectors rose. WeWork plunged more than 38% following a filing with the U.S. Securities and Exchange Commission (SEC) that raised doubts about the company's viability and mentioned the possibility of bankruptcy. Gaming company Roblox fell nearly 22% as its Q2 bookings missed expectations. Ride-sharing service Lyft dropped over 10% despite better-than-expected earnings per share, after announcing plans to cut prices. Rivian also fell nearly 10% despite beating earnings estimates. Nvidia declined about 5% following comments from Super Micro Computer pointing out some semiconductor supply chain bottlenecks. Major bank stocks such as M&T Bank and BOK Financial, which had fallen the previous day due to Moody’s mass credit rating downgrades, continued to weaken. On the other hand, Penn Entertainment rose more than 9% on news of launching a sports betting site together with ESPN.

[Image source=Reuters Yonhap News]

Investors focused on the impact of Moody’s mass credit rating downgrades of U.S. regional banks, corporate earnings, upcoming inflation data releases this week, and the Biden administration’s investment restrictions on China. The previous day, the New York stock market closed lower across the board due to Moody’s mass downgrades of credit ratings for 10 U.S. regional banks and warnings of possible downgrades for some large banks. Regarding this, Victoria Green, Chief Investment Officer at G Squared Private Wealth, appeared on CNBC’s Closing Bell and said, "The market is catching its breath," adding, "It is still overbought and there are many macroeconomic headwinds. This correction was inevitable." Philip Kolmar of MRB Partners said, "The market has run up a lot," describing the current phase as "a bit of a wait-and-see, digestion stage."

Now, market attention is focused on economic indicators such as the July CPI and Producer Price Index (PPI) to be released starting the next day. The importance of inflation data has increased following mixed signals from last week’s employment report. The U.S. July CPI, to be released on the 10th, is expected to rise 3.3% year-over-year and 0.2% month-over-month. The June CPI had recorded its lowest increase in over two years at 3%, but the July increase is expected to rebound. The July PPI, also to be announced the next day, is forecasted to rebound to positive territory from a 0.1% year-over-year decline in the previous month.

On Wall Street, given recent disagreements among Federal Reserve (Fed) officials about whether to raise rates, there are expectations that market volatility could increase after the CPI release. The previous day, Patrick Harker, President of the Philadelphia Fed, said, "Unless there is surprising new data between now and mid-September, we can be patient, hold rates steady, and be at a point where our monetary policy actions can take effect," raising hopes for an end to rate hikes. In contrast, earlier Fed Governor Michelle Bowman emphasized the need for further rate increases.

Bill Mears, Head of Capital Markets Research at U.S. Bank Wealth Management, said, "The market is focused on whether the Fed can stop raising rates because inflation is easing quickly enough," noting, "Inflation is slowing but still too high." He added, "The Fed is at a crossroads." Currently, the market largely expects a rate hold in September, buoyed by recent hopes for a soft landing. According to the Chicago Mercantile Exchange (CME) FedWatch tool, federal funds futures as of the afternoon reflect more than an 86% probability that the Fed will hold rates steady at the upcoming September FOMC meeting.

Corporate earnings announcements are also nearing completion. According to FactSet, 90% of S&P 500-listed companies have reported earnings so far, with about four-fifths beating Wall Street expectations. After the market close on this day, Walt Disney and Wynn Resorts reported earnings. Disney’s Q2 earnings per share (EPS) were $1.03, exceeding the market estimate of $0.95. However, quarterly revenue was $22.33 billion, slightly below the market expectation of $22.5 billion.

The Biden administration announced an executive order in the afternoon regulating U.S. capital investments by private equity and venture capital firms in three Chinese sectors: AI, advanced semiconductors, and quantum computing. Companies planning to invest in these sectors in China must report their investment plans in advance, and the U.S. Treasury Secretary will have decision-making authority, including the power to prohibit investments. The Biden administration plans to issue detailed implementation rules after consulting industry stakeholders. This measure aims to prevent U.S. funds from flowing into technology development that could be used for Chinese military purposes amid intensifying U.S.-China strategic competition, from a national security perspective.

In the New York bond market, the yield on the 10-year U.S. Treasury note stood at 4.01%, while the 2-year Treasury yield, sensitive to monetary policy, hovered around 4.8%. The Dollar Index, which measures the value of the U.S. dollar against six major currencies, remained steady near 102.5.

International crude oil prices hit a yearly high. On the New York Mercantile Exchange, September delivery West Texas Intermediate (WTI) crude closed at $84.40 per barrel, up $1.48 (1.78%) from the previous session. This is the highest level since November 16 of last year. Despite concerns over demand slowdown due to weak Chinese economic data, U.S. gasoline inventory declines and intensified clashes between Russia and Ukraine in the Black Sea have pushed oil prices higher.

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