[New York Stock Market] Tech and Financial Stocks Weaken Together, Indices Fall Across the Board... International Oil Prices Down Over 1%

Sector Rotation from Overvalued Tech Stocks to Small and Mid-Caps
China Bans Nvidia H200 Imports; Credit Card Rate Cap Impacts Financials
Trump's "Killings in Iran Are Stopping" Remarks Drive Oil Prices Lower

On January 14 (local time), all three major U.S. stock indexes closed lower. Both technology and financial stocks weakened, dragging the indexes down. However, a rotation of funds from highly valued technology stocks to economically sensitive stocks led to gains in small and mid-cap stocks. International oil prices fell by more than 1.5% as geopolitical tensions eased following remarks by U.S. President Donald Trump regarding Iran.

On the 14th (local time), a trader is working on the trading floor of the New York Stock Exchange (NYSE) in the United States. Photo by AFP Yonhap News

On this day, the Dow Jones Industrial Average, which focuses on blue-chip stocks, closed at 49,149.63, down 42.36 points (0.09%) from the previous trading day. The S&P 500 Index, which tracks large-cap stocks, fell 37.14 points (0.53%) to 6,926.6, while the tech-heavy Nasdaq Index dropped 238.123 points (1.0%) to close at 23,471.749.

By sector, technology stocks showed particularly weak performance. Broadcom plunged 4.15%. Nvidia and Micron fell by 1.44% and 1.41%, respectively. Investor sentiment was dampened by reports that Chinese customs authorities had banned the import of Nvidia's AI chip "H200," which had been approved for export to China by the U.S. Microsoft dropped 2.4%, and Apple declined by 0.4%.

Financial stocks weakened regardless of earnings. Wells Fargo slipped 4.61% as its fourth-quarter revenue fell short of market expectations. Despite strong earnings, Bank of America and Citigroup fell by 3.78% and 3.34%, respectively. The broad sell-off in financial stocks was attributed to President Donald Trump's announcement that he would cap credit card interest rates at 10% for one year.

In contrast, as funds rotated from highly valued large-cap tech stocks to economically sensitive stocks, the Russell 2000 Index, which is composed of small and mid-cap stocks, rose by 0.7%.

Steve Sosnick, Chief Strategist at Interactive Brokers, commented, "The market situation is far more complex than the declines in the major indexes suggest," adding, "This session illustrates how sector rotation affects the stocks that drive the indexes." He also noted that the current market conditions are "not as bad as they appear on the surface."

Investors also digested inflation and consumer data on this day. According to the U.S. Department of Labor, the Producer Price Index (PPI) for November of last year rose by 0.2% from the previous month. This was higher than October's 0.1% but fell short of the market expectation of 0.3%. Retail sales were more robust than expected. The U.S. Census Bureau under the Department of Commerce reported that retail sales in November increased by 0.6% from the previous month to $735.9 billion. This exceeded the market forecast of 0.5% and marked the largest increase since July. Inflationary pressures were lower than expected, while consumer spending remained strong.

Amid concerns over slowing employment and inflation still above the central bank's target of 2%, there is considerable uncertainty regarding the future path of interest rates. Tom Graff, Chief Investment Officer at Facet, stated, "If the PPI figures are translated into core Personal Consumption Expenditures (PCE), the result could be somewhat higher," adding, "In that case, it could pose a significant problem for the Federal Reserve and exacerbate concerns about its independence." Additionally, the fact that the U.S. Department of Justice has launched an investigation into Federal Reserve Chair Jerome Powell over remodeling costs for the Fed's headquarters is also a source of concern.

Geopolitical factors remain a key focus. U.S. Vice President J.D. Vance and Secretary of State Marco Rubio met with the foreign ministers of Denmark and Greenland at the White House and agreed to form a high-level working group to discuss issues related to Greenland. President Trump has openly expressed his intention for the United States to acquire Greenland, a Danish autonomous territory, citing the need to strengthen security in the Arctic Ocean.

Tensions related to Iran appear to be easing somewhat. President Trump told reporters, "I have heard that the killings in Iran are stopping." The previous day, he had suggested the possibility of U.S. military intervention by stating that "a helping hand is being extended" to anti-government protesters in Iran, but his latest remarks indicated that military action is not imminent.

International oil prices are falling as concerns over instability in Iran ease. As of 4:17 p.m. Eastern Time on the New York Mercantile Exchange (NYMEX), West Texas Intermediate (WTI) crude was trading at $60.20 per barrel, down $0.95 (1.55%) from the previous session, while Brent crude, the global oil price benchmark, was trading at $64.54 per barrel, down $0.93 (1.42%) from the previous day.

U.S. Treasury yields were slightly weaker. The yield on the 10-year U.S. Treasury, the global bond yield benchmark, fell by 2 basis points (1bp = 0.01 percentage point) to 4.14% from the previous day, while the yield on the 2-year U.S. Treasury, which is sensitive to monetary policy, was down 1 basis point to 3.51%.