[New York Stock Market] Broad Decline on Profit-Taking... Nasdaq Down 0.71%

The New York stock market closed lower together. The Standard & Poor's (S&P) 500 index and the Nasdaq Composite index hit record highs during the session as the U.S. May inflation data met expectations, but they ended the day in a downtrend due to a flood of profit-taking sales.

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On the 28th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 39,118.86, down 45.20 points (0.12%) from the previous session. The S&P 500 index fell 22.39 points (0.41%) to 5,460.48, and the Nasdaq index dropped 126.08 points (0.71%) to close at 17,732.60.

The U.S. May Personal Consumption Expenditures (PCE) price index, the inflation gauge preferred by the Federal Reserve (Fed), showed a moderate trend. The U.S. Department of Commerce announced that the core PCE price index rose 2.6% year-over-year in May. According to CNBC, the annual increase was the lowest in over three years since March 2021. It was up 0.1% from the previous month.

Following the rise in the PCE price index, the New York stock market started the session with gains. During the session, the Nasdaq index surpassed 18,000 for the first time ever, and the S&P 500 also rose to 5,523, both hitting record highs.

However, investors took this as an opportunity to sell. This was because a slowdown had already been confirmed in the May Consumer Price Index (CPI). Given the strong rally in the first half of the year, a profit-taking mood emerged as the market approached the last trading day of June. This year, the S&P 500 index has surged more than 15%, and the Nasdaq index has jumped over 20%.

The Chicago Purchasing Managers' Index (PMI) results released that day also dampened investor sentiment.

According to the Institute for Supply Management (ISM)-Chicago and Market News International (MNI), the Chicago PMI for June rose sharply by 12 points to 47.4 from 35.4 in the previous month. This was the highest level since November last year and significantly exceeded market expectations of 40.0. This indicates that manufacturing activity in the U.S. Midwest expanded substantially compared to the previous month, far surpassing expectations. The sharp rise in the Chicago PMI is interpreted as increasing concerns about the ISM Manufacturing PMI.

John Luke Thiner, portfolio manager at Aptus Capital Advisors, said, "The stock market showed resilience in the first half of this year, but more participation is needed for the market to reach record highs in the second half." He added, "Factors such as the presidential election, timing of interest rate cuts, and weakening consumer demand could pressure the stock market."

The sectoral trends were mixed. The consumer discretionary sector fell 1.36%, while the communication and utilities sectors also dropped more than 1%. On the other hand, the real estate and energy sectors showed gains.

According to the FedWatch tool of the Chicago Mercantile Exchange (CME), the probability that the Fed will cut the benchmark interest rate in September was reflected at 62.3% near the close of trading. The probability of holding rates steady in September was 37.7%.

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) rose 0.20 points (1.63%) to 12.44 compared to the previous session.