[New York Stock Market] Rise Led by Rebound in Tech Stocks Including Apple

S&P 500 Index Up 1.41% · Nasdaq Up 2.2%

The three major indices of the U.S. New York stock market closed higher on Monday, the 8th (local time), buoyed by a rebound in tech stocks including Apple, ahead of the Consumer Price Index (CPI) release and the full-scale earnings season.

On the New York Stock Exchange (NYSE) that day, the Dow Jones Industrial Average, centered on blue-chip stocks, closed at 37,683.01, up 216.90 points (0.58%) from the previous session. The S&P 500, focused on large-cap stocks, rose 66.30 points (1.41%) to 4,763.54, and the tech-heavy Nasdaq index closed at 14,843.77, up 319.70 points (2.20%).

In the S&P 500, all sectors except energy stocks rose. Energy stocks fell more than 1% due to the sharp drop in international oil prices. In contrast, technology stocks surged about 2.7%. Consumer discretionary, real estate, and communication-related stocks also rose more than 1%. Apple, which had shown weakness last week, rose 2.42% from the previous session on news of the Vision Pro launch. Major tech stocks such as Microsoft (MS), Google Alphabet, Amazon, and Tesla all showed gains in the 1-2% range. Nvidia, a leading AI stock, rose more than 6%, hitting an all-time high on news that mass production of semiconductor chips for China will begin in the second quarter. AMD also rose more than 5%. On the other hand, Boeing's stock fell more than 8% after Alaska Airlines' Boeing 737 Max aircraft made an emergency landing due to a fuselage hole during flight, leading to a complete ban on the operation of the same aircraft model.

[Image source=AFP Yonhap News]

Investors closely watched the movements of tech stocks including Apple and government bond yields ahead of this week's corporate earnings season and inflation data releases. Last week, the New York stock market showed weakness due to concerns that the market's expectations for interest rate cuts were excessive, compounded by a downgrade of Apple's investment rating. However, on Monday, a rally emerged as bargain hunting was confirmed mainly in tech stocks, and government bond yields also declined. Adam Turnquist, Chief Technology Strategist at LPL Financial, evaluated that the combination of last week's market weakness and the movement of the 10-year Treasury yield gave sufficient confidence in tech stocks. Earlier, investment bank Evercore ISI also issued a buy recommendation, suggesting to take advantage of the decline in Apple and others.

This week, key inflation indicators that provide hints about the future monetary policy path of the Federal Reserve (Fed) will be released. On the 11th, the Consumer Price Index (CPI) will be published, followed by the Producer Price Index (PPI) on the 12th. Since the employment report for December last year, released late last week, showed mixed figures and did not provide clear policy hints, investors are expected to seek confirmation of the recent disinflation trend and gauge the direction of future monetary policy through the CPI and PPI.

Currently, Wall Street expects the December Consumer Price Index (CPI), to be released on the 11th, to rise 0.2% month-over-month and 3.3% year-over-year. This represents a larger increase than the previous month. However, the core CPI, which excludes the volatile energy and food sectors, is estimated to have risen 0.2% month-over-month and 3.8% year-over-year, showing a slowdown compared to the previous month. If the inflation indicators confirm a faster-than-expected slowdown, market expectations for interest rate cuts are likely to gain momentum. Conversely, if the data disappoints, it could strengthen claims that the market's optimism has been excessive, potentially leading to a stock price correction.

According to the Chicago Mercantile Exchange (CME) FedWatch, the interest rate futures market currently prices in nearly a 65% chance that the Fed will cut rates by at least 0.25 percentage points in March. Although still high, this is significantly lower than the nearly 90% probability seen a week ago.

The Q4 earnings season for major U.S. banks also kicks off this week. The earnings reports of large banks such as JPMorgan, Wells Fargo, and Citigroup, which are generally regarded as the bellwether for Wall Street's earnings season, will be released on the 12th. On the same day, Delta Air Lines and UnitedHealth will also announce their earnings. According to FactSet, the net income of S&P 500-listed companies for Q4 last year is estimated to have increased 1.3% year-over-year, marking two consecutive quarters of growth. However, market attention is expected to focus more on the Q1 earnings guidance. Since the cumulative effects of monetary tightening and high inflation are expected to become visible in corporate earnings starting this year, downward pressure on the New York stock market is anticipated depending on these guidance figures.

In the New York bond market, government bond yields declined. The benchmark 10-year U.S. Treasury yield hovered around 4.0%, while the 2-year yield, sensitive to monetary policy, was around 4.36%. The dollar index, which measures the value of the U.S. dollar against six major currencies, fell more than 0.1% to 102.2.

The price of Bitcoin, the leading cryptocurrency, surpassed $47,000 for the first time in 21 months. Bitcoin's price exceeding $46,000 is the first since April 2022, about 21 months ago. This is attributed to the increased likelihood of ETF approval as spot Bitcoin ETF issuers such as BlackRock and Grayscale submitted their final updated documents to the U.S. Securities and Exchange Commission (SEC).

International oil prices plunged on news that Saudi Arabia lowered crude oil prices. On the New York Mercantile Exchange, the price of West Texas Intermediate (WTI) crude oil for February delivery closed at $70.77 per barrel, down $3.04 (4.12%) from the previous session.