[New York Stock Market] Nasdaq Down 1.3% on Tech Stock Decline... Big Tech Earnings and FOMC Ahead Cause Mixed Trends

NVIDIA Falls 7%
Big Tech Earnings Including MS & FOMC Awaited
US June Job Openings Exceed Expectations

The three major indices of the U.S. New York stock market closed mixed on the 30th (local time). Large tech stocks showed weakness ahead of earnings announcements from big tech companies such as Microsoft (MS) after the market closed. Investors focused on the big tech earnings reports and the two-day Federal Open Market Committee (FOMC) meeting starting that day.

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On the day at the New York Stock Exchange (NYSE), the blue-chip-focused Dow Jones Industrial Average rose 203.4 points (0.5%) from the previous trading day to close at 40,743.33. The large-cap-focused S&P 500 index fell 27.1 points (0.5%) to 5,436.44, and the tech-heavy Nasdaq index dropped 222.78 points (1.28%) to finish at 17,147.42.

By individual stocks, large tech companies declined. Nvidia, the leader in artificial intelligence (AI), plunged 7.04%. MS fell 0.89%. Amazon dropped 0.81%, and Netflix declined 0.7%. Meta, Facebook's parent company, fell 0.54% following news that it agreed to pay $1.4 billion (about 1.94 trillion KRW) to settle a privacy lawsuit filed by the state of Texas.

Cybersecurity firm CrowdStrike plunged 9.72%. The negative news came after Delta Air Lines suffered flight cancellations due to a recent IT outage and is reportedly preparing lawsuits against CrowdStrike and MS. Shipping company Merck fell 9.81% despite strong second-quarter earnings, as its annual earnings outlook fell short of expectations.

Market attention was focused on MS and AMD, which were set to release earnings after the market close. If this week's big tech earnings exceed expectations, it is expected to create a rebound in tech stocks that had fallen last week due to disappointing results from Alphabet, Google's parent company, and Tesla. Meta and Qualcomm will report earnings on the 31st, followed by Apple, Amazon, and Intel on the 1st of next month.

Edward Jones Principal's senior investment strategist Edward Jones said, "We are seeing earnings growth spreading," adding, "Investors have high standards for tech stock earnings. If there are signs of a slowdown in AI spending, stock prices may fall somewhat, but a significant adjustment has already taken place."

The number of job openings in the U.S. last month exceeded expectations. According to the June Job Openings and Labor Turnover Survey (JOLTs) released by the U.S. Department of Labor, job openings last month totaled 8.184 million. Although this was below the revised figure for the previous month (8.23 million), it exceeded market expectations (8.02 million), showing a stronger-than-expected employment situation. However, a more accurate picture of U.S. employment is expected to be confirmed in the July employment report to be released by the Department of Labor on the 2nd of next month. Experts expect nonfarm payrolls to have increased by 177,000 last month, a significant slowdown compared to 206,000 in the previous month. The unemployment rate is expected to have remained steady at 4.1%.

The biggest market focus this week is the FOMC meeting held from this day through the next. The U.S. Federal Reserve (Fed) is expected to keep the benchmark interest rate steady at 5.25-5.5% for the eighth consecutive time. The key issue is whether the Fed will provide clues about the timing and number of rate cuts this year. The market is already pricing in a rate cut in September. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds futures market fully reflects the possibility of a rate cut of at least 0.25 percentage points at the September FOMC meeting. The probability of a 0.5 percentage point cut in September stands at 14.2%.

Shima Shah, Chief Global Strategist at Principal Asset Management, analyzed, "Inflation is showing a downward trend, supporting the Fed's rate cuts," adding, "A still-robust economic outlook and strong corporate earnings are working in harmony to strengthen risk assets and expand returns beyond tech stocks."

U.S. Treasury yields weakened. The 10-year U.S. Treasury yield, a global bond yield benchmark, fell 3 basis points (1 bp = 0.01 percentage points) from the previous trading day to 4.14%, while the 2-year U.S. Treasury yield, sensitive to monetary policy, traded down 2 basis points to 4.36%.

International oil prices fell on concerns over weakening demand in China. West Texas Intermediate (WTI) crude oil closed at $74.73 per barrel, down $1.08 (1.4%) from the previous trading day, and Brent crude, the global oil price benchmark, closed at $78.63 per barrel, down $1.15 (1.4%) from the previous day.