New York Stock Market Mixed Ahead of FOMC... Nvidia Down Over 3%

NVIDIA Declines Despite Unveiling Next-Gen AI Chip
Market Cautious Ahead of June 20 FOMC Meeting Results

The three major indices of the U.S. New York stock market showed mixed trends in early trading on the 19th (local time). Although Nvidia unveiled its next-generation artificial intelligence (AI) chip at the developer event 'GTC 2024' the day before, investors engaged in profit-taking, causing the stock price to weaken. Investors are watching the market while awaiting the Federal Open Market Committee (FOMC) meeting announcements scheduled for the 19th and 20th.

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As of 9:37 a.m. at the New York Stock Exchange (NYSE) on the day, the Dow Jones Industrial Average was up 0.06% from the previous close, standing at 38,814.97. The large-cap-focused S&P 500 index was down 0.29% at 5,134.42, and the tech-heavy Nasdaq index was trading 0.67% lower at 15,995.81.

By individual stocks, Nvidia was down 3.15%. The day before, Nvidia unveiled the next-generation AI chip B100 based on the new graphics processing unit (GPU) Blackwell. However, it appears that profit-taking emerged as the announcement fell short of market expectations, pushing the stock price down. Other tech stocks were also declining. Super Micro Computer, which has risen more than 250% this year, was down 10.94% on its second day included in the S&P 500 index. Apple and Alphabet, Google's parent company, which had risen the previous day on news that they are discussing embedding Google's AI chatbot Gemini into the iPhone, fell 0.23% and 0.57%, respectively.

Investors' attention is focused on the FOMC monetary policy meeting results to be released the next day. In this second meeting of the year, the U.S. Federal Reserve (Fed) is expected to keep the benchmark interest rate steady at the current 5.25?5.5% range. The key issue is whether the Fed will revise the dot plot, which shows economic and interest rate forecasts. Previously, at the December FOMC meeting last year, the Fed projected the median federal funds rate for this year to be 4.5?4.75%, anticipating three rate cuts of 0.25 percentage points each over the year. However, with inflation indicators such as the Consumer Price Index (CPI) and Producer Price Index (PPI) showing stronger-than-expected results, concerns have arisen that the Fed may signal a prolonged period of current rates.

The market's expectations for the timing of rate cuts are also being pushed back. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds futures market on the day reflected a 63.2% probability that the Fed will cut rates by 0.25 percentage points at the June FOMC meeting, down from 69.2% a week ago. There is a growing view that the first rate cut by the Fed might occur in July rather than June.

U.S. investment bank Goldman Sachs revised its forecast for the number of rate cuts this year from four to three. It expects the Fed to reduce the benchmark interest rate by 0.25 percentage points three times starting in June. As sticky inflation continues to be confirmed, the Fed is expected to delay the timing of monetary easing.

Sam Millette, bond director at Commonwealth Financial Network, said, "The Fed will provide a lot of oxygen as it wraps up the March meeting," adding, "The market does not expect rate changes at this meeting or the next, but March will be a really interesting meeting."

Government bond yields are falling. The U.S. 10-year Treasury yield, a global bond yield benchmark, is trading around 4.3%, down 3 basis points (1bp = 0.01 percentage points) from the previous trading day. The 2-year U.S. Treasury yield is at 4.7%, down 3 basis points from the previous day.

International oil prices are slightly higher. West Texas Intermediate (WTI) crude oil rose $0.12 to $82.28 per barrel, and Brent crude increased $0.10 to $86.99 per barrel.