[New York Stock Market] Mixed Close Near Flat Amid Wholesale Price Rise and Earnings Weakness... Dow Down 0.46%

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Major indices on the U.S. New York Stock Exchange showed mixed performance on the 14th (local time), faltering due to weak earnings from banks. Following high consumer prices, wholesale prices also remained elevated, fueling expectations that the Federal Reserve's (Fed) tightening will accelerate.

On the day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 30,630.17, down 142.62 points (0.46%) from the previous session. The S&P 500, focused on large-cap stocks, fell 11.40 points (0.30%) to 3,790.38. The tech-heavy Nasdaq index ended the day up 3.60 points (0.03%) at 12,511.9.

Among individual stocks, financials showed notable weakness after reporting earnings below expectations. JP Morgan Chase's stock price dropped 3.49% from the previous close. Morgan Stanley (-0.39%) also ended in the red. Wells Fargo and Citigroup, which are set to release earnings this week, fell 0.84% and 2.99%, respectively. Energy and materials stocks also underperformed. Halliburton declined 3.39%, EOG Resources fell 3.57%, and Mosaic closed down 5.70%.

Technology stocks showed mixed results. Apple (+2.05%), Nvidia (+1.37%), and Tesla (+0.54%) rose, while Meta Platforms (-3.33%), Salesforce (-1.50%), and Netflix (-1.01%) declined.

Investors focused on producer prices, earnings from banks including JP Morgan Chase, and movements in Treasury yields on the day.

Second-quarter earnings were weaker than expected. JP Morgan Chase's quarterly net income fell 28% year-over-year. Morgan Stanley's net income also plunged 29%.

The U.S. Department of Labor reported that the June Producer Price Index (PPI) rose 11.3% year-over-year, marking the highest level in three months. Following the previous day's report of a 9% increase in the U.S. June Consumer Price Index (CPI), the elevated wholesale prices further strengthen expectations for the Fed's tightening measures. Producer prices are closely watched as they carry the risk of passing through to consumer prices.

According to the Chicago Mercantile Exchange (CME) FedWatch tool, federal funds (FF) futures on the day priced in a 41.6% chance of a 1.0 percentage point rate hike in July. Although this is lower than the 80% range seen after the CPI release the previous day, it remains significant compared to just a week ago when the probability was 0%, indicating many investors still bet on aggressive Fed tightening. The Fed will hold its regular Federal Open Market Committee (FOMC) meeting over two days starting on the 26th of this month.

Fed Governor Christopher Waller, attending a summit on the day, said, "If data before the July meeting come in much stronger, we will consider a larger rate hike," leaving open the possibility of a hike exceeding 1.0 percentage point. He described the previous day's CPI data as "disappointing" and emphasized that "the Fed's most important mission is price stability."

U.S. Treasury Secretary Janet Yellen also reaffirmed the priority of price stability during a press conference in Indonesia, where the G20 Finance Ministers' meeting was held, stating that U.S. inflation is "unacceptably high."

In the New York bond market on the day, the 10-year Treasury yield rose to around 2.95%. The 2-year yield, which is sensitive to monetary policy amid tightening expectations, jumped to about 3.13%. The inversion between short- and long-term Treasury yields, often seen as a recession signal, continues. The yield spread between the 2-year and 10-year notes is at its widest since 2000.

BCA Research stated in a report, "The Fed's policy remains data-dependent," adding, "Aggressive tightening will continue until inflationary pressures peak." The U.S. weekly initial jobless claims released the same day increased by 9,000 from the previous week to 244,000.

Oil prices fell amid concerns over demand reduction due to economic slowdown. On the New York Mercantile Exchange, August West Texas Intermediate (WTI) crude oil closed at $95.78 per barrel, down 52 cents (0.54%) from the previous session.