[New York Stock Market] Nvidia Falls 3%... Dow Up 0.04%

Tech Stocks Including Nvidia Take a Breather
S&P and Nasdaq Decline

The New York stock market showed mixed trends. As Nvidia, the 'leader in artificial intelligence (AI),' experienced a decline, the enthusiasm for investing in tech stocks somewhat stalled. However, the Dow Jones Industrial Average rose for the fourth consecutive trading day, reflecting the remaining expectations of stock investors.

On the 21st (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 39,150.33, up 15.57 points (0.04%) from the previous session. The Standard & Poor's (S&P) 500 index fell 8.55 points (0.16%) to 5,464.62, and the Nasdaq index dropped 32.23 points (0.18%) to 17,689.36. The Dow index maintained an upward trend throughout the week, excluding the holiday on the 19th. Although the S&P 500 and Nasdaq indices hit all-time highs this week, they recorded losses for two consecutive trading days.

New York Stock Exchange
Photo by Reuters Yonhap News

Market participants' attention was again focused on Nvidia that day. Since the AI investment boom has concentrated on Nvidia, the fact that Nvidia's stock price fell by more than 3% for the second consecutive day weighed on the stock indices. On a weekly basis, Nvidia experienced its first decline in nine weeks after rising for eight consecutive weeks. Nevertheless, Nvidia's stock price has surged nearly 155% since the beginning of this year.

Market participants expressed doubts about whether a full-fledged correction phase would emerge, despite a slight pause in the popularity of tech stocks for AI and semiconductor investments.

The enthusiasm in the tech sector, which had supported the high-flying stock indices, cooled down, leading to a consolidation phase.

That day was the so-called 'Triple Witching Day,' when the expiration dates of three major derivatives overlapped. As a result, overall market trading volume surged. 'Triple Witching Day' refers to the day when contracts for major derivatives such as stock index futures, stock index options, and individual stock options expire simultaneously, occurring on the third Friday of March, June, September, and December.

While U.S. economic indicators showed mixed signals, market participants are watching for signs of economic slowdown that could hint at interest rate cuts.

According to the National Association of Realtors (NAR), U.S. existing home sales in May (seasonally adjusted) decreased by 0.7% from the previous month to an annual rate of 4.11 million units.

The median price of existing homes in May surged 5.8% year-over-year to $419,300, marking a record high.

The Conference Board announced that the U.S. Leading Economic Index fell 0.5% in May to 101.2, worse than the Wall Street Journal (WSJ) market forecast of a 0.3% decline.

According to S&P Global (Markit), the preliminary U.S. services Purchasing Managers' Index (PMI) for June recorded 55.1, exceeding Wall Street's market forecast of 54.0.

The preliminary manufacturing PMI for June also came in at 51.7, surpassing the market expectation of 51.0.

There was no significant change in the Federal Reserve's (Fed) interest rate cut outlook. Austan Goolsbee, president of the Federal Reserve Bank of Chicago, said in an interview with Fox News that if U.S. inflation continues to show a calming trend like in May, the Fed could lower interest rates.

According to the CME Group's FedWatch Tool, the probability of a 25 basis point rate cut by the Fed in September is priced at 61.6%, while the probability of holding rates steady in September is 32.3%. The chance of a second rate cut in December this year is priced relatively high at 45.1%. Among individual stocks, despite Nvidia's decline, Alphabet A rose by about 1.8%, and Amazon.com also increased by about 1.6%. Qualcomm fell by about 1%, and Apple and Meta Platforms (Facebook) also declined by about 1%.

Major bank stocks fell. Shares of JPMorgan Chase, Bank of America, Citigroup, and Goldman Sachs all dropped by about 1%. It was reported that the Fed and the Federal Deposit Insurance Corporation (FDIC) pointed out flaws in the way some large banks' derivatives portfolios were unwound in their 2023 living wills.

Shares of Sarepta Therapeutics jumped about 30% following the U.S. Food and Drug Administration's (FDA) approval to expand the use of the rare muscle disease treatment developed by the company.

Sector indices for health care, materials, real estate, and communication rose, while those for energy, financials, industrials, technology, and utilities declined.

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) traded down 0.08 points (0.60%) to 13.20 compared to the previous session.