New York Stock Market Falls Broadly Amid Big Tech Weakness... MS Down 5.7%, Meta Down 2.5%

September PCE Inflation Rises 2.1% YoY, Exceeding Expectations
New Unemployment Claims at 216,000... Lowest in 5 Months
Apple and Amazon Earnings Released After Market Close

The three major indices of the U.S. New York stock market were down in early trading on the 31st (local time). Investor sentiment weakened as the market digested the earnings reports of Microsoft (MS) and Meta, the parent company of Facebook, released the previous day. The rising trend in government bond yields is also weighing on investor sentiment.

As of 10:26 a.m. in the New York stock market on the day, the Dow Jones Industrial Average, which focuses on blue-chip stocks, was down 0.64% from the previous trading day, standing at 41,872.22. The S&P 500 index, centered on large-cap stocks, was down 1.24% at 5,741.56, and the Nasdaq index, focused on technology stocks, was trading down 1.91% at 18,252.37.

By individual stocks, technology stocks are weak. MS is down 5.7%. Although MS posted quarterly earnings that exceeded market expectations the previous day, its revenue forecast for the October-December quarter fell short of Wall Street estimates, leading to continued selling pressure. The growth rate of Azure, its cloud service, is also expected to slow compared to the previous quarter. Meta is also down 2.53%. Although its quarterly earnings exceeded market expectations, the number of Facebook users in the third quarter fell short of expectations, and the increase in capital expenditures next year is weighing on the stock price. AI leader Nvidia is down 4%, and AMD is down 2.8%. Super Micro Computer, embroiled in accounting fraud allegations, is plunging 14.99%.

Big tech earnings announcements will continue for the rest of the week. Investors are focusing on Apple and Amazon, which are scheduled to release earnings after the market closes on this day.

Inflation data was released this morning. According to the U.S. Department of Commerce, the Personal Consumption Expenditures (PCE) price index for September rose 2.1% year-on-year, matching market expectations (2.1%). The core PCE price index, which excludes volatile energy and food prices and shows the underlying trend of inflation, rose 2.7% year-on-year, slightly exceeding the forecast (2.6%).

Employment also appears solid. The U.S. Department of Labor reported that initial jobless claims for the week of October 20-26 fell by 12,000 from the previous week's revised figure to 216,000, the lowest level since May. This was 13,000 below the expert forecast of 229,000. Continuing claims, which count those claiming unemployment benefits for at least two weeks, stood at 1,862,000 for the week of October 13-19, below the previous week's revised figure (1,888,000) and market expectations (1,890,000). The labor market seems to be recovering from the impact of Hurricanes Hilary and Milton.

Jamie Cox, Managing Director of Harris Financial Group, analyzed, "The scenario investors want to see is rising growth and falling inflation. As long as disinflation continues in this cycle, the Fed does not need to fear a steadily growing economy when it comes to cutting interest rates."

The market expects the U.S. Federal Reserve (Fed) to maintain a gradual rate-cutting stance. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds futures market on this day reflected a 94.1% probability that the Fed will cut rates by 0.25 percentage points at the November Federal Open Market Committee (FOMC) meeting. The probability of a rate hold was 5.9%.

Government bond yields are on the rise. The U.S. 10-year Treasury yield, a global bond yield benchmark, was at 4.31%, down 5 basis points (1bp = 0.01 percentage points) from the previous trading day. The 2-year Treasury yield was fluctuating around 4.21%, up 5 basis points from the previous day.

International oil prices are rising. West Texas Intermediate (WTI) crude oil rose $0.94 (1.37%) from the previous trading day to $69.55 per barrel, and Brent crude, the global oil price benchmark, increased $0.86 (1.29%) to $73.02 per barrel.