[New York Stock Market] Awaiting US CPI... Mixed Close in Narrow Range, Nasdaq Down 0.10%

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Major indices on the U.S. New York stock market closed mixed in a narrow range on the 8th (local time) as investors awaited the upcoming Consumer Price Index (CPI) report scheduled for this week.

On the New York Stock Exchange (NYSE) that day, the Dow Jones Industrial Average closed at 32,832.54, up 29.07 points (0.09%) from the previous session. The S&P 500, which focuses on large-cap stocks, ended down 5.13 points (0.12%) at 4,140.06, while the tech-heavy Nasdaq closed at 12,644.46, down 13.10 points (0.10%).

By individual stocks, semiconductor shares collectively weakened following Nvidia’s lowered earnings guidance. Nvidia closed down 6.30% from the previous session. AMD fell 2.19%, and Broadcom dropped 1.07%.

Palantir slid more than 14% after reporting a quarterly loss. BioNTech also declined over 7% due to disappointing earnings. Meanwhile, Pfizer rose 0.61%, and Global Blood Therapeutics gained 4.32% after news broke that Pfizer would acquire the biopharmaceutical company Global Blood Therapeutics.

Additionally, some beneficiaries such as electric vehicle maker Rivian (+6.78%) rallied after the U.S. Senate passed the Inflation Reduction Act, which focuses on climate change measures. Disney rose more than 2%, marking a notable gain within the Dow index.

Investors on the day were closely watching corporate earnings, concerns over economic slowdown, and the Federal Reserve’s tightening pace while awaiting the CPI release scheduled for the 10th.

The July CPI inflation rate is expected to slow to 8.9% compared to the previous month. However, the core CPI, which has slowed for three consecutive months, is likely to rebound to the 6% range. The still-high inflation level is also why Fed officials have repeatedly issued hawkish remarks this month, saying "there is still a long way to go."

Especially after last week’s July employment report significantly exceeded expectations, easing recession fears, the market increasingly expects the Fed to implement a rate hike larger than a big step (0.5 percentage points) to curb inflation. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds futures market currently prices in a 67.5% chance of a giant step in September, up sharply from 29% a week ago. Meanwhile, the probability of a big step has fallen from 72% to 32.5%.

Corporate earnings announcements are also ongoing. According to FactSet, as of the 5th, 87% of companies listed on the S&P 500 have reported second-quarter earnings, with 75% of them beating earnings per share estimates.

The market is also paying attention to the impact of the Inflation Reduction Act, which is set for a House vote following Senate approval. The Biden administration’s Inflation Reduction Act includes a $430 billion (approximately 558 trillion KRW) government spending plan aimed at climate change response, energy security, and drug price reductions. It also includes measures to raise funds by imposing a minimum 15% corporate tax on large companies and taxing share buybacks.

Scott Kronert, a Citi analyst, stated that the impact of the minimum 15% corporate tax and share buyback taxes on S&P 500 companies’ earnings per share would be less than 1%. He assessed, “Focusing on the Fed’s actions, inflation, economic slowdown, and interest rate effects will be more relevant to growth.”

In the New York bond market that day, Treasury yields fell. The 10-year Treasury yield slightly declined to around 2.74%. Ben Jeffrey, a BMO interest rate strategist, described the atmosphere as “quiet and orderly compared to last week when the 10-year yield moved more than 30 basis points.”

Crude oil prices, which hit their lowest level since early February, rose on a rebound buying spree. On the New York Mercantile Exchange, September West Texas Intermediate (WTI) crude oil closed at $90.76 per barrel, up $1.75 (2%) from the previous session.