[New York Stock Exchange] Two-Day Decline on Caution Over "AI Rally"... Intel Surges Over 6%

AI Boom Fuels Both Optimism and Caution
Nvidia's Investment in OpenAI Followed by Alibaba's AI Spending Expansion
Powell's "Stocks Are Overvalued" Comments Weigh on the Market
Focus on August PCE Inflation Data to Be Released on the 26th

All three major indices on the New York Stock Exchange closed lower on September 24 (local time). The market fluctuated amid mixed optimism and caution over the artificial intelligence (AI) rally, but failed to find clear upward momentum, resulting in a second consecutive day of declines.

On this day, the Dow Jones Industrial Average, which is centered on blue-chip stocks, ended the session at 46,121.28, down 171.5 points (0.37%) from the previous trading day. The S&P 500 Index, which focuses on large-cap stocks, fell by 18.95 points (0.28%) to 6,637.97, while the Nasdaq Index, which is centered on technology stocks, dropped by 75.618 points (0.34%) to close at 22,497.855.

By stock, Intel surged 6.41% on news that it is seeking investment from Apple. In contrast, Nvidia fell by 0.82%. Oracle, which is issuing $15 billion in corporate bonds, declined by 1.71%. Amazon weakened by 0.23%, even though Wells Fargo upgraded its investment rating to "overweight." Micron also dropped by 2.82%, despite announcing earnings guidance that exceeded market expectations.

The market continued to fluctuate as divergent outlooks emerged regarding the sustainability of the AI rally. Since September 22, when news broke that Nvidia would invest $100 billion in OpenAI, optimism about AI has spread, but expectations and concerns are now intersecting. On this day, Alibaba in China announced plans to expand AI infrastructure spending and collaborate with Nvidia, raising expectations, but this did not lead to a rebound in the stock market.

Experts were also divided in their opinions. Jay Hatfield, CEO of Infrastructure Capital Advisors, said, "Tech stocks are somewhat overheated, and there is no clear reason to be optimistic," adding, "No one is saying the world will end without AI, but the issue right now is clearly one of (overvaluation) in terms of valuation." He predicted, "This situation could continue for a few more days," but also noted, "The S&P 500 Index has risen about 3% so far this month, which is a positive trend compared to the average September decline of 4.2% over the past five years."

The fact that Federal Reserve Chair Jerome Powell remarked the previous day that "stock prices are quite high" also increased the possibility of profit-taking.

On the other hand, Kwon Ohsung, Chief Equity Strategist at Wells Fargo, diagnosed that the AI rally is "not a bubble." He explained, "The bull market led by AI is likely to continue. The reason the Nasdaq Index has generally outperformed the S&P 500 Index since the collapse of the tech bubble is because the fundamentals have been stronger, and this trend will persist. Also, we are still in the early stages of the AI investment cycle."

There is also keen interest in the economic indicators scheduled for release this week. The Personal Consumption Expenditures (PCE) price index for August, which will be announced on September 26, is a key focus. The core PCE price index, the inflation measure most closely watched by the Fed, is expected to have risen by 0.2% month-on-month last month, a slowdown from July's 0.3%. On September 17, the Fed cut its benchmark interest rate by 0.25 percentage points to an annual range of 4.0-4.25%, and the future path of interest rates will depend on inflation and employment data.

U.S. Treasury yields are on the rise. The 10-year U.S. Treasury yield, the global benchmark for bond rates, rose 3 basis points (1bp = 0.01 percentage point) from the previous session to 4.15%, while the 2-year U.S. Treasury yield, which is sensitive to monetary policy, also rose 3 basis points to 3.6%.