▲The logo of American tech company Apple. Reuters/Yonhap News
On March 5th (Eastern Standard Time), the three major indices of the New York Stock Exchange fell for the second consecutive day.
According to Yonhap News, the Dow Jones Industrial Average ended at 38,585.19, down 404.64 points (1.04%) on the New York Stock Exchange (NYSE).
The Standard & Poor’s (S&P) 500 index closed at 5078.65, down 52.30 points (1.02%), and the Nasdaq index closed at 15,939.59, down 267.92 points (1.65%).
The Nasdaq index, which had set a record high, fell more than 2% in two days.
From the market’s opening, tech stocks were under pressure to fall due to negative news about Apple and AMD.
Apple reported a 24% drop in iPhone sales in China in the first six weeks of the year compared to the previous year. As a result, Apple’s market share in the Chinese smartphone market fell to fourth place at 15.7%. The stock price dropped nearly 3% following news of a hefty European fine the day before.
Apple’s stock price has fallen about 12% this year after falling for five consecutive trading days.
Semiconductor company AMD reported that the U.S. Department of Commerce has braked on AMD’s exports of artificial intelligence (AI) semiconductors to China.
According to media on the same day, AMD tried to get U.S. government approval to sell low-spec semiconductors designed by government semiconductor export control measures. However, the Department of Commerce reportedly blocked the approval, saying that a separate export license was needed for the product.
AMD’s stock price fell more than 3% during the day but ended it nearly flat.
The sharp drop in Tesla’s stock price also weighed on the market. According to foreign media, Tesla’s Gigafactory in Germany was temporarily shut down due to a power outage.
Upon hearing this news, Tesla’s stock price fell nearly 4%. Tesla fell more than 7% in a single day the day before due to news of a significant decrease in car shipments in China in February.
Among other large tech stocks, Microsoft (MS) fell about 3%, and Amazon and Meta fell more than 1%. Meta was negatively affected by news of Facebook and Instagram shutdowns.
Netflix’s stock price also fell nearly 3% on the day.
On the other hand, retail company Target rose more than 12% after announcing earnings that exceeded Wall Street’s expectations.
Investors seem cautious ahead of a speech by Jerome Powell, Chairman of the Federal Reserve (Fed), scheduled for the next day. It is noteworthy what hints Powell will give about the timing of the interest rate cut ahead of the regular Federal Open Market Committee (FOMC) meeting this month.
The service indices announced on the day were generally solid.
The Purchasing Managers’ Index (PMI) for services in February announced by ISM was 52.6, slightly weaker than 53.4 in January. This is slightly below the Wall Street Journal’s aggregate forecast of 53. However, the index maintained its expansionary trend by staying above 50.
The PMI for the service sector in February, compiled by S&P Global, was also 52.3, slightly lower than the previous month (52.5) but higher than the preliminary figure of 51.3 previously announced.
News also came out that the price of Bitcoin broke through $69,000, setting a new all-time high. Recently, Bitcoin prices have been showing a steep rise ahead of the halving and inflows of funds into Bitcoin ETFs (Exchange Traded Funds). There is also analysis that it is becoming an alternative investment destination due to this year’s interest rate cut.
However, Bitcoin prices showed high volatility on the day, trading around $63,000, down more than 6% at the stock market’s close.
MicroStrategy’s stock price also plunged 21% on news of plans to issue convertible bonds to buy Bitcoin.
All eight sectors except energy, staples, and finance in the S&P 500 index fell. Tech stocks led the decline, falling more than 2%.
Experts on the New York Stock Exchange said that market adjustments were natural, but they were also on high alert ahead of Powell’s testimony.
Quincy Krosby, a strategist at LPL Financial, told MarketWatch that the sell-off on the day was a “healthy adjustment” as investors have to digest the profits of the past few weeks.
She also predicted that this week would be “an important week to apply a series of interest rate cuts to stock prices” through Powell’s testimony.
Greg W. Halter, director of research at the Carnegie Investment Counsel, also evaluated that the adjustments are natural outcomes.
He said investors could move to the remaining 493 stocks, which have relatively low valuations, excluding seven stocks in the S&P 500 index.
He added, “The market is expanding, but the question is whether a market not led by MS, Apple, and Nvidia can continue to rise.”
According to the FedWatch of the Chicago Mercantile Exchange (CME), the possibility of the Fed’s interest rate cut in June reached 69.8% at the close of the Federal Funds (FF) interest rate futures market. This is a slight increase from the previous day.
The Volatility Index (VIX) of the Chicago Options Exchange (CBOE) recorded 14.46, up 0.97 points (7.19%) from the previous day.
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