[New York Stock Market] Nasdaq Down 1.04% Amid Soaring Oil Prices and Oracle Shock...

The three major indices of the U.S. New York stock market all closed lower on the 12th (local time) due to rising oil prices and sluggishness in technology stocks including Oracle. Despite the major event of Apple, the largest company by market capitalization, unveiling the new iPhone 15, no stock price rebound from the new product effect was observed.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average, centered on blue-chip stocks, recorded 34,645.99, down 17.73 points (0.05%) from the previous session. The S&P 500 index, focused on large-cap stocks, fell 25.56 points (0.57%) to 4,461.90, and the tech-heavy Nasdaq index closed at 13,773.61, down 144.28 points (1.04%).

In the S&P 500 index, all eight sectors except energy, financials, and utilities declined. Oracle plunged more than 13% after quarterly sales fell short of expectations and its future outlook was downgraded. Concerns over cloud sales caused competitors Amazon, Alphabet, and Microsoft to also decline. Apple, which unveiled the iPhone 15 series in the afternoon, dropped about 1.7%. Tesla, which had surged more than 10% the previous day, fell more than 2%. On the other hand, energy stocks showed strength supported by rising international oil prices. Occidental Petroleum jumped more than 4%. ExxonMobil and Chevron also rose close to 2-3% each.

[Image source=Reuters Yonhap News]

Investors closely watched the movements of major tech stocks including Oracle and Apple. Oracle's sharp decline throughout the trading session weighed on the overall tech sector. Kim Forrest, founder of Bokeh Capital Partners, said, "Although not a mega-cap stock, Oracle's sharp drop was one of the factors weighing down both the Nasdaq and S&P 500 indices."

Apple's stock continued to decline even after unveiling the new iPhone 15 series in the afternoon. This is interpreted as a result of ongoing shocks from China, lack of significant changes in the new product, and reduced expectations for profitability due to the decision to freeze prices. The stock movement of Apple, the largest company by market capitalization, is considered a factor that can influence the overall market sentiment. Last week, Apple’s stock plunged following news of a ban on iPhones by Chinese authorities, which also worsened investor sentiment across the tech sector.

Ahead of the Consumer Price Index (CPI) announcement scheduled for the 13th, oil prices reached their highest level since November last year. This was due to the Organization of the Petroleum Exporting Countries (OPEC) maintaining its oil demand forecasts for this year and next amid recent economic recovery. News of severe flooding in Libya, an OPEC member, which led to the closure of four oil export terminals in the eastern region, also added upward pressure on oil prices. This rise in oil prices raises concerns about future inflation, prompting caution regarding tightening policies.

On this day at the New York Mercantile Exchange, the October delivery West Texas Intermediate (WTI) crude oil price closed at $88.84 per barrel, up $1.55 (1.78%) from the previous session. This closing price was the highest since November 11 last year. During the session, WTI prices recorded gains of over 2%. Brent crude for November delivery also surpassed $92 per barrel during the session.

On the following day, the 13th, the U.S. August CPI, which could provide key hints about the Federal Reserve’s (Fed) monetary policy direction, will be released. With recent oil price increases, the August CPI inflation rate is expected to slightly exceed the previous month’s rise, hovering around 3.6%. The core CPI, which excludes volatile energy and food prices, is forecast to slow to the low 4% range. On the 14th, the U.S. August Producer Price Index (PPI), a wholesale price indicator, will be released. Since wholesale price increases typically pass through to consumer prices, this will be closely watched. Retail sales for August will also be announced on the same day. Wall Street expects that retail sales, which had previously rebounded, may slow this time. On the 15th, the University of Michigan’s consumer sentiment survey will be released.

According to the CME FedWatch tool, the federal funds futures market on this afternoon still reflects more than a 93% probability that the Fed will keep rates unchanged in September. The probability of a rate hold in November stands in the mid-50% range. Jeffrey Gundlach, CEO of DoubleLine Capital, attending a conference on this day, said, "(The tightening) is over," adding, "We have enough economic weaknesses." The NFIB Small Business Optimism Index released on this day was 91.3, below Wall Street expectations. This index reflects small business optimism and has been below the long-term average (98) for 20 consecutive months.

However, since recent economic indicators have generally been solid, if the inflation figures such as the CPI released this week exceed market expectations, the possibility of additional rate hikes could gain renewed momentum. The remaining Federal Open Market Committee (FOMC) meetings this year are scheduled for September, November, and December. Mohamed El-Erian, chief economic advisor at Allianz, appeared on CNBC on this day and said, "The market assumes the Fed will cut rates early next year," but added, "I don’t think that will happen."

In the New York bond market, the benchmark 10-year Treasury yield stood around 4.27%, while the 2-year yield, sensitive to monetary policy, was at 5.02%. The dollar index, which shows the value of the dollar against the currencies of six major countries, moved above 104.7, up more than 0.1% from the previous session. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street’s "fear gauge," rose more than 2% to the 14 level.