[New York Stock Market] Decline from First Trading Day in August After Rally... Nasdaq Down 0.18%

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Major indices of the U.S. New York stock market started the first trading day of August on the 1st (local time) with a downward trend. A pause in the rally following July, due to profit-taking and other factors, was also observed. Weak economic indicators acted as a negative factor for the stock market.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 32,798.40, down 46.73 points (0.14%) from the previous session. The S&P 500, which focuses on large-cap stocks, fell 11.66 points (0.28%) to 4,118.63, and the tech-heavy Nasdaq index closed down 21.71 points (0.18%) at 12,368.98.

By sector, energy stocks showed notable weakness due to a decline in international oil prices. Chevron closed down 2.0% from the previous session. Devon Energy (-2.04%), ExxonMobil (-2.53%), Diamondback Energy (-1.64%), and Occidental Petroleum (-0.79%) also slipped together.

On the other hand, semiconductor stocks AMD and Nvidia rose 2.45% and 1.53%, respectively. Nikola surged nearly 8% on news of acquiring a battery pack company. Electric vehicle stocks such as Rivian (+1.49%) and Lucid (+1.53%) also showed gains.

Boeing rose 6.13% after the U.S. Federal Aviation Administration (FAA) approved the plan to resume deliveries of the 787 Dreamliner. Alibaba’s stock price rose more than 1% after the company stated it would cooperate to maintain its listing despite being placed on the U.S. Securities and Exchange Commission (SEC) preliminary delisting list.

Investors closely watched economic indicators, concerns about economic slowdown, and movements in government bond yields on the first trading day of August. Due to the rapid rebound in July, the market showed relatively small fluctuations on this day. In July, the three major New York stock indices recorded the highest monthly gains since 2020, supported by expectations of a market bottom, better-than-expected earnings, and the Federal Reserve’s stance on moderating the pace of tightening.

The economic indicators released on this day showed weak performance. The final July manufacturing Purchasing Managers’ Index (PMI) from S&P Global was 52.2, the lowest in two years. It was below both the previous month’s figure (52.7) and the earlier preliminary estimate (52.3). The July U.S. manufacturing PMI compiled by the Institute for Supply Management (ISM) was also the lowest in two years at 52.8. June U.S. construction spending decreased 1.1% month-over-month to an annualized $1.7623 trillion, falling short of market expectations. Experts had forecast a 0.4% increase, but the figure came in negative.

As concerns about economic slowdown persisted, the 10-year U.S. Treasury yield fell to around 2.59% in the New York bond market. The decline in Treasury yields indicates increased demand for safe-haven government bonds, which drives bond prices up. The 2-year yield, sensitive to monetary policy, stood at about 2.9%, continuing the inversion where short-term yields exceed long-term yields. This is generally considered a precursor to a recession.

Dennis Dvoscher of 22V Research said, "The Federal Reserve does not want to trigger a recession," but added, "Their much stronger priority is to control inflation. Even if this means causing a sharp drop in risk assets, it is what they must do."

Additionally, geopolitical tensions are rising as China reacts strongly to the visit of Nancy Pelosi, the third-ranking U.S. official, to Taiwan, adding to market uncertainties.

Oil prices fell due to weak economic indicators from China and the U.S. On the New York Mercantile Exchange, September West Texas Intermediate (WTI) crude oil closed at $93.89 per barrel, down $4.73 (4.8%) from the previous session.