[New York Stock Market] Mixed Close Amid Rally Fatigue... Nvidia Falls 3.5%

NVIDIA Drops to 2nd Place After Losing Market Cap Lead to MS
S&P 500 and Nasdaq Decline
Last Week's Unemployment Claims Exceed Expectations

The three major U.S. stock indices in New York closed mixed on the 20th (local time) after being closed the previous day for Juneteenth, the emancipation day. Market fatigue from the recent rally and profit-taking sales led to a pause in the market. Rising Treasury yields also weighed on investor sentiment. AI leader Nvidia fell more than 3%, ceding the top market capitalization spot back to Microsoft (MS).

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On the day at the New York Stock Exchange (NYSE), the blue-chip-focused Dow Jones Industrial Average rose 299.9 points (0.77%) to close at 39,134.76. The large-cap S&P 500 index fell 13.86 points (0.25%) to 5,473.17, and the tech-heavy Nasdaq index dropped 140.65 points (0.79%) to 17,721.59.

By individual stocks, Nvidia gave up all its early gains and fell 3.54%. It had surpassed MS to become the largest by market cap on the 18th but dropped back to second place the next trading day. Apple also declined 2.15%. Trump Media & Technology Group (TMTG), the parent company of former President Donald Trump's social media platform Truth Social, plunged 14.56% on news of new share issuance. Global consulting firm Accenture surged 7.29%, standing out in the AI business despite recent weak earnings.

Earlier, the S&P 500 and Nasdaq indices hit all-time highs on the 18th, powered by Nvidia's strength. These were the 31st and 20th record highs respectively this year. Craig Johnson, managing director at Piper Sandler, analyzed, "The bullish momentum of the S&P 500 and Nasdaq remains intact, but the market is vulnerable to pullbacks or corrections due to short-term overbought conditions."

While some on Wall Street predict the S&P 500 will surpass 6,000 by year-end, market outlooks are divided. Scott Kroner, chief U.S. equity strategist at Citigroup, said, "Is it surprising that Wall Street continues to beat a different drum than the fundamental U.S. economy?" He added, "Undoubtedly, the influence of generative AI is penetrating the current U.S. equity environment as a growth driver."

However, concerns about the market being overbought are also raised. Thomas Fitzpatrick, managing director at R.J. O'Brien & Associates, noted, "Markets can remain irrational longer than we can handle," but cautioned, "The AI theme feels reminiscent of the 2000-2001 dot-com bubble."

Employment and housing data released that day supported expectations of a slowing U.S. economy. According to the U.S. Department of Labor, initial jobless claims for the week of June 9-15 totaled 238,000, slightly above the expert forecast of 235,000. This was down from the revised 243,000 claims the previous week. Initial claims reflect corporate layoff trends. Continuing claims, representing those filing for unemployment benefits for at least two weeks, rose by 15,000 to 1.828 million for the week of June 2-8.

Housing starts in May fell 5.5% month-over-month to 1.277 million units, below both the forecast of 1.37 million and the previous month's 1.352 million. Building permits for the previous month dropped 3.8% to 1.386 million, also missing the forecast of 1.45 million and the prior month's 1.44 million.

Federal Reserve officials continued to speak that day. Neel Kashkari, president of the Minneapolis Fed, projected that it could take 1-2 years for U.S. inflation to return to the Fed's 2% target, citing currently high wage growth as a reason.

Bond yields are rising. The 10-year U.S. Treasury yield, a global benchmark, climbed 11 basis points (bp) to 4.26%, while the 2-year Treasury yield, sensitive to monetary policy, rose 2 bp to 4.73%.

International oil prices rose on the weaker employment data. West Texas Intermediate (WTI) crude increased $0.60 (0.74%) to $82.17 per barrel, and Brent crude, the global benchmark, gained $0.64 (0.75%) to close at $85.71.