[New York Stock Market] Alphabet Plummets and Interest Rate Pressure Lead to Decline... Nasdaq Down 2.43%

The three major indices of the U.S. New York stock market all closed lower on the 25th (local time) due to rising bond yields and concerns over Google Alphabet's cloud performance. Alphabet's stock price plummeted more than 9%, causing the tech-heavy Nasdaq index to experience its worst drop since February.

At the New York Stock Exchange (NYSE), the blue-chip-focused Dow Jones Industrial Average closed at 33,035.93, down 105.45 points (0.32%) from the previous session. The large-cap S&P 500 index fell 60.91 points (1.43%) to 4,186.77, and the Nasdaq index dropped 318.65 points (2.43%) to 12,821.22. This is the first time since May that the S&P 500 has fallen below the 4,200 level.

Within the S&P 500, nine sectors excluding utilities and consumer staples all declined. The telecommunications sector saw a drop approaching 6%. Despite Alphabet's Q3 revenue and earnings exceeding expectations when announced after the previous day's close, concerns over weakness in the cloud segment caused its stock to fall more than 9%. Apple fell 1.35%, Tesla 1.89%, and Amazon 5.58%, showing broad weakness among tech stocks. Major semiconductor stocks such as Nvidia, AMD, and Intel also declined by 4-5%. Meta Platforms closed down 4.17% ahead of its earnings announcement. Meanwhile, Microsoft (MS) rose more than 3%.

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Investors focused on earnings reports from major companies including big tech, movements in bond yields, and geopolitical risks stemming from the Middle East. As Q3 earnings announcements continue, investor attention is particularly on big tech companies that drove the New York stock market in the first half of the year. Alphabet and MS both reported quarterly revenues exceeding expectations, but diverging results in the cloud segment led to the stock price movements seen today. So far, about 29% of companies listed on the S&P 500 have reported earnings, with approximately 78% beating expectations. Meta Platforms' earnings per share, announced after today's close, came in at $4.39, surpassing the expected $3.63. Amazon will announce its earnings after the market close the following day.

Ed Moya, senior market strategist at OANDA, told CNBC, "Earnings are dominating the headlines, but you can't take your eyes off the bond market." He added, "We haven't seen bond yields rise this sharply since 1982, and this will be a problem for the stock market."

In the New York bond market, Treasury yields are on the rise. The benchmark 10-year U.S. Treasury yield, which had previously pressured the market by exceeding 5%, stabilized in the 4.8% range the day before but rose again to around 4.95% today. The 30-year yield is around 5.08%, and the 2-year yield, sensitive to monetary policy, stands at about 5.12%.

Later this week, the U.S. third-quarter Gross Domestic Product (GDP) growth rate and the Personal Consumption Expenditures (PCE) price index, a preferred inflation gauge of the Fed, will be released. The September PCE price index is estimated to rise 0.4% month-over-month. The third-quarter economic growth rate is expected to reach the mid-4% range annually, supported by robust consumer spending. If these indicators exceed expectations, concerns about Fed tightening could intensify.

The market largely expects the Fed to hold interest rates steady in November. According to the CME FedWatch tool, as of today, federal funds futures markets are pricing in a greater than 99% probability that the Fed will keep rates unchanged at 5.25-5.5% during the FOMC regular meeting scheduled for October 31 to November 1. Despite expectations of prolonged high rates, the possibility of an immediate rate hike is considered very low.

Additionally, geopolitical risks stemming from clashes between Israel and the Palestinian militant group Hamas continue. Major foreign media, citing sources, reported that the delay in Israel's ground offensive is due to U.S. concerns about the aftermath of driving Hamas out of the Gaza Strip. The international community is divided over whether a ceasefire or hostage release should come first amid ongoing military actions.

U.S. President Joe Biden, after concluding a summit with the Australian Prime Minister, stated at a press conference, "Israel has the responsibility and the right to respond to the massacre of its citizens," and "We will ensure Israel has what it needs to defend itself against terrorists." He also mentioned the so-called "two-state solution," recognizing Palestine as an independent state coexisting with Israel.

Oil prices rose for the first time in four days amid Middle East geopolitical risks. On the New York Mercantile Exchange, December delivery West Texas Intermediate (WTI) crude oil closed at $85.39 per barrel, up $1.65 (1.97%) from the previous day.