[New York Stock Market] Mixed Trading Amid Tech Sector Weakness and US Fed Comments... Semiconductor Stocks Down

Fed Collins "Inflation 2% Will Take Time"
Tesla Drops on US Prosecutor Securities Fraud Investigation News
Uber Turns to Loss in Three Quarters

The three major indices of the U.S. New York stock market closed mixed within a narrow range on the 9th (local time). The market's cautious stance deepened as it absorbed the decline in tech stocks and hawkish (preference for monetary tightening) remarks from Federal Reserve (Fed) officials. Rising bond yields also weighed on the stock market.

On that day at the New York Stock Exchange (NYSE), the blue-chip-focused Dow Jones Industrial Average closed at 39,056.39, up 172.13 points (0.44%) from the previous trading day. The large-cap-focused S&P 500 index fell 0.03 points (less than 0.1%) to 5,187.67, and the tech-heavy Nasdaq index dropped 29.8 points (0.18%) to close at 16,302.76.

By individual stocks, Uber fell 5.72%. On that day, Uber announced that its first-quarter revenue increased 15% year-on-year to $8.82 billion, while its net loss expanded more than fourfold to $654 million (a net loss of $0.32 per share). Although revenue exceeded market expectations, the net loss disappointed the market, which had anticipated profits. Tesla declined 1.74% amid news that the U.S. Department of Justice is investigating whether it committed securities and wire fraud by misleading investors about its autonomous driving system.

Semiconductor stocks also showed a weak trend. Intel fell 2.22% after lowering its second-quarter revenue forecast due to U.S. government export restrictions on semiconductors to China. British semiconductor company ARM dropped more than 8% in after-hours trading as of 4:33 p.m. following a disappointing earnings outlook. ARM projected revenue for the 2025 fiscal year ending in March next year at $3.8 billion to $4.1 billion and earnings per share (EPS) of $1.45 to $1.65, which is below analysts' expectations at the lower end. The market had expected revenue of $4.01 billion and EPS of $1.53. ARM fell 1.6% during regular trading. Nvidia declined 0.16%.

On the other hand, pharmaceutical company Amgen and the largest U.S. bank JPMorgan Chase rose 2.33% and 2.03%, respectively.

Ross Mayfield, an investment strategy analyst at Baird, said, "Stock valuations will always be a major challenge for tech stocks," adding, "Tech stocks have entered earnings season with very high standards amid excitement about AI and expanding valuations. There is a lot of volatility every day."

Investors are trying to digest remarks from Fed officials throughout this week to find clues about the future path of interest rates.

Susan Collins, president of the Federal Reserve Bank of Boston, said on the day that it may take a long time for inflation to reach the Fed's 2% target. In a speech at the Massachusetts Institute of Technology (MIT), she said, "The recent surprise rise in (economic) activity and inflation suggests a strong need to maintain policy at the current level until we have greater confidence that inflation is consistently moving toward 2%." She added, "Looking at recent data, I have come to believe it will take longer than previously thought for inflation to slow down," and explained, "Maintaining this restrictive level for longer will slow the economy."

Collins' remarks align with those of other officials, including Fed Chair Jerome Powell. Earlier, at a press conference following the Federal Open Market Committee (FOMC) meeting on the 1st, Powell said, "It will take longer than expected to gain confidence that inflation is on a sustainable path toward 2%." Minneapolis Fed President Neel Kashkari also said the day before, "I think it is likely we will remain at this level much longer than currently expected or anticipated by the public until we confirm the effects of monetary policy," adding, "While not the most likely scenario, we cannot rule out further rate hikes."

Investors are also paying close attention to upcoming speeches by Fed Governor Michelle Bowman and Fed Vice Chair for Supervision Michael Barr on the 10th.

Bond yields are rising. The U.S. 10-year Treasury yield, a global benchmark for bond yields, rose 3 basis points (1 bp = 0.01 percentage points) from the previous trading day to 4.49%, while the 2-year Treasury yield, sensitive to monetary policy, increased 1 bp to 4.84%.

International oil prices rose. West Texas Intermediate (WTI) crude oil closed at $78.99 per barrel, up $0.61 from the previous trading day, and Brent crude, the global benchmark, ended at $83.58 per barrel, up $0.42.