[New York Stock Market] China’s Antitrust Probe on Nvidia Sparks Broad Decline... Nvidia Down 2.6%

AMD Falls 5.6% on BoA Downgrade
Fed Enters Blackout Ahead of Nov 18 FOMC
This Week's Release of November CPI and PPI

The three major indices of the U.S. New York Stock Exchange all closed lower on the 9th (local time). The technology sector weakened following a drop in AI leader Nvidia amid China's antitrust investigation. As Federal Reserve (Fed) officials enter a 'blackout' period ahead of the December Federal Open Market Committee (FOMC) regular meeting, refraining from comments on monetary policy, investors are focusing on the inflation data to be released this week.

On this day in the New York stock market, the blue-chip-focused Dow Jones Industrial Average closed at 44,401.93, down 240.59 points (0.54%) from the previous trading day. The large-cap-focused S&P 500 index fell 37.42 points (0.61%) to 6,052.85, and the tech-heavy Nasdaq index dropped 123.08 points (0.62%) to 19,736.69.

By individual stocks, AI leader Nvidia declined 2.55%. The Chinese State Administration for Market Regulation launched an investigation into Nvidia for alleged violations of antitrust laws, causing the stock to fall. Nvidia is accused of violating some conditions imposed by Chinese authorities during its acquisition of Mellanox, which were approved with restrictions. AMD fell 5.57% after Bank of America (BoA) downgraded its investment rating on AMD from 'buy' to 'neutral.' Intel slipped 0.53%. Meta, Facebook's parent company, dropped 1.65%, and Amazon fell 0.41%.

Sam Stovall, Chief Investment Strategist at CFRA Research, said, "News like China's investigation into Nvidia may pose some obstacles, but it does not seem likely to persist until the end of the year," adding, "We expect to climb the 'wall of worry' this year and surpass the progress we saw last year."

Last week in the New York stock market, the S&P 500 and Nasdaq indices rose 1% and 3.3%, respectively, closing at record highs. The Dow Jones Industrial Average ended the week down 0.6%.

The November nonfarm payrolls report released on the 6th showed stronger-than-expected job growth but was not enough to diminish expectations for a Fed rate cut this month. According to the U.S. Department of Labor, nonfarm payrolls increased by 227,000 last month. This exceeded both the sharp decline in job gains in October (36,000), affected by two hurricanes and a Boeing strike, and experts' forecasts (202,000). The unemployment rate rose by 0.1 percentage points to 4.2% compared to the previous month but met market expectations.

According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds futures market on this day priced in an 85.8% probability that the Fed will cut rates by 0.25 percentage points at the December FOMC regular meeting. The probability of holding rates steady was 14.2%.

Jeremy Siegel, a professor at the Wharton School, said, "Everything else is going exactly as the Fed wants," and predicted, "There will be one rate cut on December 18, and only 2 to 3 cuts next year."

This week, investors' main focus is on inflation data. On the 11th, the November Consumer Price Index (CPI) will be released. Experts expect the CPI to rise 0.3% month-over-month and 3.3% year-over-year, maintaining the same level as in October. The Producer Price Index (PPI) for November, to be released the following day on the 12th, is estimated to have increased 0.3% month-over-month and 2.5% year-over-year, with the rise expanding compared to October (0.2% and 2.4%, respectively).

Government bond yields are on the rise. The U.S. 10-year Treasury yield, a global benchmark for bond yields, rose 5 basis points (1bp = 0.01 percentage points) from the previous trading day to 4.2%, while the 2-year Treasury yield, sensitive to monetary policy, moved up 2 basis points to 4.12%.