New York Stock Market Starts New Year's First Trading Day Lower... Apple Down Over 3%

The major indices of the U.S. New York stock market are all showing a downward trend in the early hours of trading on January 2, 2024 (local time), the first trading day of the year. Amid a rebound in Treasury yields, the stock prices of Apple and Nvidia, the top two companies by market capitalization, have each fallen more than 3%, confirming weakness in technology stocks.

At around 10:20 a.m. at the New York Stock Exchange (NYSE) on this day, the Dow Jones Industrial Average was trading at around 37,671, down 0.05% from the previous close. The S&P 500, which focuses on large-cap stocks, fell 0.63% to around 4,740, while the tech-heavy Nasdaq index dropped 1.53% to 14,781.

Currently, the S&P 500 shows notable declines in technology and telecommunications-related stocks. In contrast, energy and healthcare stocks rose more than 1%. Apple fell more than 3% after Barclays downgraded its investment rating, citing weak iPhone sales forecasts for this year. Nvidia, which benefited significantly from artificial intelligence (AI) last year, also dropped more than 3%. Tesla rose about 1% as its Q4 deliveries (484,507 units) exceeded expectations. Est?e Lauder fell more than 1% after Deutsche Bank downgraded its rating due to short-term risks. Baidu dropped more than 3% after canceling its plan to acquire Joy's live streaming platform. Joy experienced a decline of over 16%.

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Investors are closely watching the direction of large-cap stocks including Apple and movements in Treasury yields on the first trading day of the new year. There is widespread analysis suggesting that profit-taking pressure could increase early in the year, especially on technology stocks that surged sharply last year. Notably, Apple's stock decline today appears to be acting as a negative factor for the broader technology sector. Barclays lowered Apple's price target from $161 to $160 per share, which is about 17% below last Friday's closing price.

This week, a series of employment-related economic indicators will be released, including the U.S. Department of Labor's Nonfarm Payroll report, the ADP private employment report, and the Job Openings and Labor Turnover Survey (JOLTs). The minutes from the December FOMC meeting, which were viewed as dovish (favoring monetary easing), will also be published. Additionally, manufacturing and non-manufacturing Purchasing Managers' Indexes (PMI) are scheduled for release. Through these, investors are expected to gauge the pace of interest rate cuts by the Federal Reserve (Fed).

Currently, the market continues to expect an interest rate cut as early as March. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the probability that the Fed will cut rates by at least 0.25 percentage points in March is close to 80% in the federal funds (FF) futures market. The outlook for a rate hold stands at around 20%.

However, this represents a slight increase in the rate-hold outlook compared to the previous close. This is interpreted as reflecting some caution against overly optimistic market sentiment based on expectations of rate cuts. If the Fed's rate cuts do not occur as quickly as the market anticipates, it could immediately worsen investor sentiment.

In the New York bond market, Treasury yields rebounded. The benchmark 10-year U.S. Treasury yield rose to around 3.893%. The 2-year yield, which is sensitive to monetary policy, is moving around 4.32%. The dollar index, which measures the value of the U.S. dollar against six major currencies, is up more than 0.7% at 102.1.

Manufacturing indicators showed weakness below the baseline of 50. The S&P Global Manufacturing PMI for December was 47.9, down from the previous month and below the earlier preliminary figure of 48.2.

Concerns about growth this year have also been raised. The cumulative effects of tightening have made the slowdown in consumer spending more visible, and corporate growth could also deteriorate. Adam Crisafulli of Vital Knowledge noted, "The biggest risk facing the stock market is not that the Fed and others fail to cut rates as much as expected, but that earnings per share decline more than expected in an environment where growth slows and pricing power weakens."

European stock markets are mixed. Germany's DAX index is trading slightly higher. France's CAC index and the UK's FTSE index are down 0.29% and 0.22%, respectively.