[New York Stock Exchange] Mixed Close as Investors Take Profits in AI Stocks... Dow Up 0.55%

Nasdaq Falls as Tech Stocks Weaken
Defense Stocks Surge on Trump's Defense Budget Remarks
Focus Shifts to December Jobs Report Due on the 9th

The three major indexes of the U.S. stock market closed mixed on January 8 (local time). As investors took profits in artificial intelligence (AI)-related stocks, a rotation occurred with funds moving into energy, consumer goods, and small-cap stocks. International oil prices surged by more than 3%. Investors are now focused on the December jobs report, the last major economic indicator of the week, which is set to be released the following day.

Traders are working on the floor of the New York Stock Exchange (NYSE) in the United States. Photo by Reuters Yonhap News

On this day, the Dow Jones Industrial Average, which is centered on blue-chip stocks, closed at 49,266.11, up 270.03 points (0.55%) from the previous trading day. The S&P 500 Index, which tracks large-cap stocks, rose 0.53 points (0.01%) to 6,921.46, while the technology-heavy Nasdaq Index fell 104.259 points (0.44%) to close at 23,480.016.

By sector, major technology stocks related to AI declined. Nvidia dropped by 2.17%. Oracle fell by 1.66%, and Palantir posted a 2.65% loss. Meta, the parent company of Facebook, and Apple also dropped by 0.41% and 0.5%, respectively. In contrast, defense contractors Northrop Grumman and Lockheed Martin surged by 2.44% and 4.36%, respectively. This reflected expectations following President Donald Trump's announcement the previous day that he would increase next year's defense budget by more than 50%, setting it at around $1.5 trillion.

While large-cap technology stocks faltered, there was a notable shift of funds into cyclical and small-to-mid-cap stocks. The Russell 2000 Index, composed of small and mid-cap stocks, rose by 1.11% and outperformed the Nasdaq Index by about 4 percentage points during the first five trading days of this year.

Paul Tiku, Head of Asset Allocation and Client Solutions at Calamos Investments, said, "At this point, it is unclear whether this movement is just a pause or the start of a full-fledged rotation. The market is still searching for direction, and while economic indicators and forecasts are relatively optimistic, the U.S. stock market has already posted significant gains for three consecutive years." He added, "The key is whether this is simply an attempt to determine the market's direction or the beginning of a broader rotation."

Natalia Lipikina, Head of EMEA Equity Strategy at JP Morgan Private Bank, noted, "After several days of gains, some profit-taking is occurring. Geopolitical risks remain quite elevated, and the market is now preparing for the upcoming earnings season."

The main focus for the market is the U.S. Department of Labor's Bureau of Labor Statistics (BLS) employment report for December, which will be released on January 9. This is considered a key indicator for gauging the Federal Reserve's interest rate path for the year. Experts expect nonfarm payrolls to increase by 73,000 in December, surpassing November's 64,000. The unemployment rate is projected to fall by 0.1 percentage points from the previous month to 4.5%.

Overall, there are no signs of a sharp deterioration in employment indicators. According to the Department of Labor, new unemployment claims for the week of December 28 to January 3 totaled 208,000, up from the previous week's 200,000 but below the market expectation of 213,000. This is interpreted as a reflection of companies reducing both new hiring and layoffs amid policy uncertainties, including tariffs.

Geopolitical variables, such as the ongoing tensions surrounding Venezuela and moves to bring Greenland under U.S. influence, are also major points of interest for the market. Previously, U.S. Secretary of State Marco Rubio announced that he would meet with Danish officials next week regarding issues related to Greenland, an autonomous territory of Denmark, and mentioned that all options, including military measures, are being considered to secure Greenland.

Yields on U.S. Treasury bonds are generally on the rise. The 10-year U.S. Treasury yield, the global benchmark for bond rates, is up 4 basis points (1bp = 0.01 percentage points) from the previous day to 4.18%. The 2-year U.S. Treasury yield, which is sensitive to monetary policy, is trading 2 basis points higher than the previous day at around 3.49%.

International oil prices jumped by more than 3%. West Texas Intermediate (WTI) crude rose $1.77 (3.2%) from the previous session to $57.76 per barrel, while Brent crude, the global oil price benchmark, climbed $2.03 (3.4%) to $61.99 per barrel.