[New York Stock Market] Nasdaq Falls for 4th Day... Down 0.89% Due to Tightening Concerns and Sharp Drop in Apple

The three major indices of the U.S. New York stock market closed mixed on the 7th (local time) amid ongoing concerns over prolonged tightening. The stock price of Apple, the largest by market capitalization, plunged following reports of a ban on iPhones by Chinese authorities, confirming a decline mainly in tech stocks.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average rose 57.54 points (0.17%) from the previous session to close at 34,500.73. Meanwhile, the S&P 500, which focuses on large-cap stocks, fell 14.34 points (0.32%) to 4,451.14, and the tech-heavy Nasdaq dropped 123.64 points (0.89%) to 13,748.83. The Nasdaq index slid for the fourth consecutive trading day.

Within the S&P 500, utility, real estate, and healthcare stocks rose, while technology, materials, and industrial stocks declined. In particular, as concerns over tightening increased, tech stocks sensitive to interest rates fell more than 1.5%. Apple dropped 2.92% following additional foreign media reports that China plans to expand the iPhone ban to state-owned enterprises beyond just government officials. Semiconductor stocks such as Nvidia (-1.74%) and AMD (-2.46%) also showed weakness. Qualcomm fell more than 7%. AI software company C3.ai declined over 12% due to disappointing earnings. ChargePoint Holdings also fell nearly 11% after missing forecasts. McDonald's rose over 1% after Wells Fargo upgraded its investment rating. UnitedHealth, Merck, and Johnson & Johnson all rose more than 1%, supporting the Dow index.

[Image source=Reuters Yonhap News]

Investors, amid the weakness in tech stocks including Apple, closely monitored international oil prices, government bond yields, and key economic indicators to gauge the Federal Reserve's (Fed) monetary policy direction. Recently, stronger-than-expected economic data, rising oil prices, and climbing bond yields have combined to heighten market concerns about monetary tightening. Additionally, the foreign media report that China plans to extend the iPhone ban from some departments to state-owned enterprises further worsened investor sentiment across tech stocks that day. Edward Moya, senior market analyst at OANDA, said, "The Nasdaq is sinking as Apple's weakness negatively impacts tech stocks," adding, "Apple's growth story heavily depends on China, so if sanctions intensify, it will pose significant problems for other big tech companies reliant on China."

The weekly initial jobless claims released that morning indicated that the labor market remains robust. According to the U.S. Department of Labor, initial jobless claims for the week of August 27 to September 2 totaled 216,000, down 13,000 from the previous week. This is the lowest level in seven months and below Wall Street expectations. Continuing claims, which count those filing for unemployment benefits for at least two weeks, decreased by 40,000 to 1.68 million. David Russell, global market strategist at TradeStation, commented, "Today's jobless claims report raises concerns about rate hikes," adding, "Even if the Fed does not raise rates at the September meeting, the likelihood of a hawkish dot plot has increased."

According to the CME FedWatch tool, as of that afternoon, federal funds futures still priced in over a 93% chance that the Fed will hold rates steady in September. The probability of a hold continuing through November stands at around 55%. The bet that the Fed will raise rates by 0.25 percentage points in November rose from the mid-30% range a week ago to the low 40% range on this day. Consequently, investors are focusing on the August Consumer Price Index (CPI) report to be released on the 13th. If the CPI increase exceeds market expectations, the possibility of additional rate hikes within the year will gain momentum.

Chris Zaccarelli, Chief Investment Officer at Independent Advisor Alliance, told CNBC that with recent oil price increases and a strong labor market confirmed, the need for Fed action will grow. He said, "People hoped the Fed would hold rates steady for the rest of the year, but there is a possibility of one or two more hikes," adding, "This has somewhat negative implications for a market that expected the Fed to finish all its work this year." The remaining FOMC meetings this year are in September, November, and December.

In the New York bond market, government bond yields fell but remain near this year's highs. The two-year Treasury yield, sensitive to monetary policy, dropped below 5%. The benchmark 10-year yield is hovering around 4.25%. The dollar index, which measures the value of the U.S. dollar against six major currencies, rose 0.17% to the 105 level. Heightened tightening concerns, along with weak economic data from Europe and China compared to the U.S., have strengthened the U.S. dollar. CNBC noted that the dollar has risen for eight consecutive weeks and analyzed that this dollar strength could pose another headwind for the stock market in September.

International oil prices, which had been rising amid concerns over production cuts by major oil-producing countries, fell on this day for the first time in 10 trading days. On the New York Mercantile Exchange, October delivery West Texas Intermediate (WTI) crude oil closed at $86.87 per barrel, down 67 cents (0.77%) from the previous session. This decline is interpreted as profit-taking amid concerns over high prices despite a decrease in oil inventories. Earlier released weak economic data from China, increasing economic uncertainty, also influenced the drop. However, WTI remains more than 10% higher compared to the beginning of the year.