[New York Stock Market] Broad Decline Ahead of Thanksgiving Holiday... Technology Stocks ↓

Tech Stocks Fall on Profit-Taking
October PCE Up 2.3% YoY...Increase Widens
Q3 Growth Rate 2.8% Driven by Strong Consumer Spending

All three major indices of the U.S. New York Stock Exchange closed lower on the 27th (local time), a day before the Thanksgiving holiday. Technology stocks fell as investors took profits. With the U.S. economy maintaining solid growth and last month's inflation slowdown stalling, there are expectations that monetary authorities may slow the pace of interest rate cuts.

Yonhap News

On that day in the New York stock market, the blue-chip-focused Dow Jones Industrial Average closed at 44,722.06, down 138.25 points (0.31%) from the previous trading day. The large-cap-focused S&P 500 index fell 22.89 points (0.38%) to 5,998.74, and the tech-heavy Nasdaq index dropped 115.1 points (0.6%) to 19,060.48.

Among individual stocks, weakness was prominent in technology shares. Microsoft (MS) fell 1.17%. AI leader Nvidia declined 1.15%, and Meta, the parent company of Facebook, dropped 0.76%. Dell Technologies and Hewlett-Packard (HP) plunged 12.23% and 11.38%, respectively, after disappointing quarterly earnings announcements.

The market focused on the inflation data released that morning. According to the U.S. Department of Commerce, the Personal Consumption Expenditures (PCE) price index for October rose 2.3% year-over-year. Although it met market expectations, it was 0.2 percentage points higher than September's 2.1%. The core PCE price index, excluding volatile energy and food prices, increased 2.8% year-over-year. This also matched forecasts but showed a slight uptick from September's 2.7%. Core services prices, excluding housing and energy, rose 0.4% month-over-month, pushing up the inflation rate.

Following the release of the November Federal Open Market Committee (FOMC) minutes by the Federal Reserve (Fed) the previous day, which confirmed the committee's cautious approach to monetary easing, there are views that the pace of rate cuts could slow as last month's deflation (slowing inflation rate) stalled. The U.S. economic growth rate released that day was also confirmed to be solid, reinforcing the analysis that aggressive monetary easing for economic stimulus is not urgent. The Commerce Department's preliminary estimate of real GDP for the third quarter showed an annualized increase of 2.8% from the previous quarter. Consumer spending, which rose 3.5%, the highest level this year, drove strong growth. New unemployment claims for the week of November 10-16 also fell by 2,000 from the revised previous week to 213,000, marking the lowest level in seven months. This was 2,000 below experts' expectations of 215,000.

The market expects the Fed to proceed with a 'small cut' (0.25 percentage point rate cut) next month and then slow the pace of rate cuts starting next year. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds futures market on that day priced in a 66.5% chance that the Fed will cut rates by 0.25 percentage points at the December FOMC meeting and a 33.5% chance of holding rates steady.

Brett Kenwell, a U.S. investment analyst at eToro, said, "Overall inflation is moving in the desired direction, but if further completion is lacking, investors may need to reassess their bets on future rate cuts."

U.S. Treasury yields declined. The benchmark 10-year U.S. Treasury yield, a global bond yield benchmark, fell 5 basis points (1 bp = 0.01 percentage point) from the previous trading day to 4.24%, while the 2-year Treasury yield, sensitive to monetary policy, moved down 3 basis points to 4.22%.

International oil prices showed mixed movements within a narrow range. West Texas Intermediate (WTI) crude oil fell $0.05 (0.07%) to $68.72 per barrel, while Brent crude, the global oil price benchmark, rose $0.02 (0.03%) to $72.83 per barrel. The day before, Israel and Lebanon's Shiite militant group Hezbollah agreed to a ceasefire.

Meanwhile, the New York Stock Exchange will be closed on the 28th for Thanksgiving. On the day after Thanksgiving, the 29th, the market will close early.