New York Stock Market Rises on Tech Stock Rebound and Increase in Unemployment Claims... TSMC Up 1.3%

Taiwan TSMC Posts Surprise Q2 Earnings
US Last Week's New Unemployment Claims Exceed Expectations
Claims Over 2 Weeks Reach Highest in 2 Years 8 Months

The three major indices of the U.S. New York stock market showed an upward trend in the early trading session on the 18th (local time). Technology stocks, which had pulled down the Nasdaq index by 2.8% the previous day mainly due to semiconductor stocks, are rebounding. Last week’s initial jobless claims hit an 11-month high, exceeding market expectations, which also strengthened expectations for a rate cut in September.

As of 9:55 a.m. at the New York Stock Exchange (NYSE) on the day, the Dow Jones Industrial Average was up 0.07% from the previous close, standing at 41,228.18. The S&P 500, which focuses on large-cap stocks, rose 0.21% to 5600.1, and the Nasdaq, which is tech-heavy, was trading up 0.24% at 18,039.55.

Among individual stocks, Taiwan foundry (semiconductor contract manufacturing) company TSMC, which had plunged the previous day, rose 1.3% due to strong second-quarter earnings. TSMC reported net profit of 247.8 billion Taiwan dollars for April to June this year, a 36% increase compared to the same period last year, exceeding market expectations of 238.8 billion. Large financial firm Discover Financial Services also rose 4.06% after reporting better-than-expected second-quarter earnings. U.S. alternative meat company Beyond Meat plunged 9.21% following reports that it is discussing financial restructuring with creditors.

Semiconductor stocks that plunged the previous day are partially recovering losses. ASML is up 1.06%. Nvidia is rising 1.87%. Qualcomm and Broadcom are up 0.45% and 1.75%, respectively.

The initial jobless claims released this morning signaled a cooling labor market. According to the U.S. Department of Labor, initial jobless claims for the week of July 8 to July 14 totaled 243,000, the highest since August 2023. This exceeded both the expert forecast of 229,000 and the revised figure of 223,000 for the previous week. Continuing jobless claims, which count those claiming benefits for at least two weeks, reached 1.867 million for the week of June 30 to July 6. This is the highest level since November 2021, surpassing both the market forecast of 1.86 million and the revised figure of 1.847 million for the previous week.

Stuart Paul, an economist at Bloomberg Economics (BE), said, "The increase in continuing and initial jobless claims shows that the labor market is cooling," and predicted, "The unemployment rate will rise throughout the second half of this year, reaching 4.5% by year-end."

Expectations for a Federal Reserve (Fed) rate cut in September are gaining more weight. The market has already priced in a rate cut in September as a given. According to the Chicago Mercantile Exchange (CME) FedWatch on the day, the federal funds futures market reflects a 98.1% probability that the Fed will cut rates by at least 0.25 percentage points at the September Federal Open Market Committee (FOMC) meeting. The probability of a cut of at least 0.5 percentage points in December is 95.6%.

Meanwhile, Fed officials have been making remarks suggesting that a rate cut is imminent. Fed Governor Christopher Waller attended an event at the Federal Reserve Bank of Kansas City the previous day and said, "While we have not yet reached the final destination, we are getting closer to the time when we need to cut the policy rate." John Williams, President of the New York Fed, told the Wall Street Journal (WSJ) in an interview that inflation indicators over the past three months are "getting closer to the disinflation trend we are looking for," calling it a "positive sign." Earlier, Fed Chair Jerome Powell expressed increased confidence that inflation is moving toward 2%, and Fed officials have also signaled that policy changes are imminent.

The European Central Bank (ECB), which cut its benchmark rate last month ahead of the U.S., kept the benchmark rate steady at 4.25% at its monetary policy meeting on the day.

Investors’ attention is turning to corporate earnings announcements. Netflix is among the major companies scheduled to release earnings after the market close on the day.

U.S. Treasury yields are rising slightly. The 10-year U.S. Treasury yield, a global bond yield benchmark, rose 2 basis points (1 bp = 0.01 percentage points) from the previous trading day to 4.16%, while the 2-year Treasury yield, sensitive to monetary policy, rose 1 bp to around 4.44%.

International oil prices are declining. West Texas Intermediate (WTI) crude oil fell $0.48 (0.59%) from the previous trading day to $80.96 per barrel, and Brent crude, the global oil price benchmark, dropped $0.53 (0.62%) to $84.55 per barrel.