Mixed Start in New York Stock Market as Investors Breathe Before Big Tech Earnings

The three major indices of the U.S. New York stock market showed mixed movements in the early session on the 23rd (local time), hovering around the previous close. The Dow Jones Industrial Average, which surpassed the 38,000 mark for the first time ever the day before, edged down slightly, showing signs of consolidation. Netflix and others are scheduled to release earnings after the market closes today.

At around 10:11 a.m. at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average was trading at around 37,931, down 0.19% from the previous close. The S&P 500, which focuses on large-cap stocks, was up 0.1% at 4,855, while the tech-heavy Nasdaq Composite was up 0.21% at 15,392.

Currently, nine of the 11 sectors in the S&P 500, excluding healthcare and technology stocks, are on the rise. United Airlines is up more than 6% despite forecasting a first-quarter loss due to the grounding of Boeing 737 Max 9 aircraft, as its fourth-quarter results exceeded expectations. Verizon and Procter & Gamble also jumped around 5% each on earnings that beat Wall Street estimates. On the other hand, D.R. Horton slid more than 8% due to disappointing results. General Electric (GE) fell slightly after releasing a weak first-quarter guidance. Apple, which regained the top market capitalization spot the day before, and Netflix, which is set to announce earnings today, both showed slight gains.

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Investors are paying close attention to whether the strong trend in the New York stock market, including the S&P 500 which has repeatedly hit record highs recently, can continue amid today's consolidation. Eric Friedman, Chief Investment Officer at U.S. Bank Asset Management, said, "The recent rally is driven by easing inflation and stable corporate earnings guidance," adding, "The market is showing strength on expectations that the Federal Reserve (Fed) will adopt a dovish stance." However, the fact that the recent rally has been concentrated in technology stocks, including Nvidia, is also a concern for investors. Economic media CNBC pointed out that Nvidia, a leading AI stock, has risen 20% this month alone, while the small-cap-focused Russell 2000 index has fallen more than 1%.

This week, data such as the Personal Consumption Expenditures (PCE) price index for December last year, preliminary fourth-quarter GDP growth rate, Purchasing Managers' Index (PMI), and corporate earnings including big tech will be released. The core PCE for December, to be released on the 26th, is expected to rise 0.2% month-over-month, slightly exceeding the previous month's increase. However, it is forecasted to show a slowdown with a 3% year-over-year increase. The preliminary U.S. fourth-quarter GDP, to be released a day earlier, is expected to have slowed to around 1.9%. As Fed officials have entered a blackout period ahead of the January Federal Open Market Committee (FOMC) meeting next week, investors are likely to seek hints on future monetary policy from these indicators and figures.

Currently, market expectations for an early rate cut have somewhat diminished. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the futures market currently prices in about a 40% chance that the Fed will keep rates steady in January and cut rates by at least 0.25 percentage points at the March FOMC meeting. This delays the earliest expected rate cut from March to May.

Additionally, this week will see earnings announcements from big tech companies such as Tesla, Intel, and IBM. If these big tech firms report weaker-than-expected earnings or guidance, concerns about growth slowdown may intensify, exerting downward pressure on the New York stock market. Netflix will release its earnings after the market closes today.

In the New York bond market, Treasury yields are rising. The benchmark 10-year U.S. Treasury yield is around 4.14%, while the 2-year yield, which is sensitive to monetary policy, is around 4.40%. The Dollar Index, which measures the value of the dollar against six major currencies, is steady at around 103.6. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's fear gauge, fell more than 1% to 13.0.

European stock markets are also mixed. Germany's DAX index fell 0.04%, France's CAC index dropped 0.21%, while the UK's FTSE index rose 0.17%.