Tech Stocks Decline Leads to Consecutive Days of Weakness in New York Stock Market

[Asia Economy Reporter Yujin Cho] Major indices on the New York Stock Exchange closed lower.

On the 18th (local time) at the New York Stock Exchange, the Dow Jones Industrial Average fell 267.13 points (0.78%) from the previous close to 34,060.66.

The S&P 500 index dropped 35.46 points (0.85%) to 4,127.83, and the tech-heavy Nasdaq index declined 75.41 points (0.56%) to 13,303.64 compared to the previous close.

On the day, major IT tech stocks such as Apple, Amazon, Alphabet, and Facebook all fell more than 1%, with most large-cap tech stocks declining.

The economic indicators released that day and concerns over rising inflation influenced the market decline. As recent U.S. economic data fell short of expectations, concerns about an overheated economy somewhat eased.

New housing starts in the U.S. in April significantly decreased compared to the previous month. According to the U.S. Department of Commerce, April new housing starts were at a seasonally adjusted annual rate of 1,569,000 units, down 9.5% from the previous month. Experts surveyed by Dow Jones had expected a 2.2% decrease to 1,700,000 units.

April new housing starts increased by 67.3% compared to the same period last year.

Economic indicators in Europe are also slowing. The Eurozone's first-quarter Gross Domestic Product (GDP) fell 0.6% quarter-on-quarter, marking two consecutive quarters of negative growth.

Two consecutive quarters of negative growth are technically considered a recession. On an annualized basis, the Eurozone's first-quarter GDP decreased by 1.8%.

U.S. Treasury Secretary Janet Yellen reiterated that the Biden administration's corporate tax increase would help infrastructure investment.

At an event hosted by the U.S. Chamber of Commerce, Secretary Yellen emphasized the need for tax reform and argued that setting a minimum corporate tax rate is necessary to address the issue of companies relocating their headquarters to other countries for tax avoidance purposes.

Market experts pointed to inflation as a source of concern. Brian O'Reilly, Head of Market Strategy at Mediolanum International Funds, told the Wall Street Journal, "The main risk is always that central banks will take away the liquidity punch bowl (the bowl of drinks used at parties) before the party is over."