September FOMC Minutes Released That Afternoon
US DOJ Considers Breaking Up Google Monopoly in Search Market
CPI on 10th, PPI on 11th Announced
The three major indices of the U.S. New York stock market showed mixed movements in the early trading session on the 9th (local time), hovering around the flat line. Investors are taking a wait-and-see approach as they await the release of the Federal Open Market Committee (FOMC) minutes scheduled for the afternoon.
As of 9:38 a.m. in the New York stock market, the Dow Jones Industrial Average, centered on blue-chip stocks, rose 0.06% from the previous trading day to 42,107.64. The S&P 500, focused on large-cap stocks, fell 0.04% to 5,748.58, and the Nasdaq, dominated by tech stocks, declined 0.17% to 18,151.77.
By individual stocks, Alphabet, Google's parent company, initially dropped on news before the market opened that the Department of Justice was reviewing a corporate breakup but rose 0.03% shortly after the opening. Boeing, the U.S. aircraft manufacturer, is down 1.8% after withdrawing a wage increase plan proposed to about 33,000 technicians. Chinese-related stocks, which had risen earlier on China's economic stimulus announcements, are falling as investors take profits. Alibaba Group is down 2.3%, and Baidu has dropped 2.64%.
According to Bloomberg News, the U.S. Department of Justice is considering proposing to the Washington D.C. federal court a plan to require Google to divest some of its businesses to reduce the harm caused by its monopoly in the online search market. Previously, the Department of Justice and several states filed a lawsuit alleging that Google built a market dominance covering 90% of the U.S. search market by paying billions of dollars to smartphone makers such as Apple and Samsung Electronics, violating antitrust laws. The court ruled in August that Google violated antitrust laws and decided to determine the level of penalties by August next year. The Department of Justice's push for a corporate breakup is the first since the failed attempt to split Microsoft about 20 years ago.
The New York stock market, which closed higher the previous day on the possibility of a ceasefire between Israel and the Lebanese militant group Hezbollah, is awaiting the release of the September FOMC minutes at 2 p.m. Investors expect to gain detailed insights into the background of last month's Fed's big rate cut and clues about future economic outlook and monetary policy paths through the FOMC minutes.
With September's nonfarm payrolls increasing more than expected, the market's expectation for a 'big cut' (0.5 percentage point rate cut) has disappeared. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds futures market has lowered the probability of a 0.5 percentage point rate cut by the Fed next month from 35.2% a week ago to 0% currently. The probability of a rate hold rose from 0% to 13.9%, and the chance of a 0.25% rate hike increased from 64.8% to 86.1%.
The Consumer Price Index (CPI) will be released on the 10th. The September CPI is expected to have risen 2.3% year-on-year, further slowing from 2.5% in August. The Producer Price Index (PPI), a wholesale price index that affects the CPI with a time lag, will be released on the 11th.
The earnings season is also kicking off in earnest. Delta Air Lines will report earnings on the 10th, and JPMorgan Chase on the 11th.
Adam Crisafulli, an investment analyst at Vital Knowledge, said, "There is a tense tug-of-war between the tailwinds of economic stimulus, disinflation (slowing inflation rate), resilient growth, and healthy corporate earnings, and the high valuations (stock prices)." He analyzed, "As a result, the S&P is somewhat biased toward gains but remains stuck in a sideways phase."
Government bond yields are moving around the flat line. The U.S. 10-year Treasury yield, a global bond yield benchmark, stands at 4.04%, and the U.S. 2-year Treasury yield, sensitive to monetary policy, is at 3.98%, both at levels similar to the previous trading day.
International oil prices, which fell the previous day on the possibility of a ceasefire between Israel and Lebanon, continue to weaken due to demand decline and increased U.S. inventories. West Texas Intermediate (WTI) crude oil is trading at $72.93 per barrel, down $0.64 (0.9%) from the previous trading day, and Brent crude, the global oil price benchmark, is at $76.06 per barrel, down $1.12 (1.5%).
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