This is how the trading day ended for most trend-setting Wall Street indices:
- The S&P 500 index fell by 0.7 percent
- The Dow Jones Industrial Average rose 0.5 percent
- The Nasdaq Composite Index fell 2.1 percent
Hence, market players put on the brakes after the three indices rose sharply earlier this week. The three indices have generally risen sharply this year, and this week the indices were close to their highest levels since April 2022.
The interest rate rose for ten years after strong unemployment numbers
Along with some weak quarterly reports from major tech companies, the decline in the US stock market on Thursday was attributed to a strong new labor market report.
bloomberg It highlights an unexpected drop in the number of jobless claimants, to a two-month low. These numbers are reported weekly.
At the same time, the numbers for repeat applications for such social security showed the biggest rise in more than three months.
In any case, the report points in the direction of a strong labor market, and despite the fact that wage growth has slowed in recent months, many market players are drawing the line all the way to the Fed’s new rate hike.
The yield on “ten-year” US government bonds with a maturity of ten years rose 11 basis points to 3.85 percent Thursday night.
Pharmaceutical companies even pulled the Dow Jones index
Part of the reason the Dow Jones was the only one of the three indexes to rise was attributed to pharmaceutical company Johnson & Johnson’s share price growth of just under six percent.
This came after the company reported revenue and earnings per share in the second quarter that beat expectations, and when the stock rose too much, it lifted the entire Dow — the index includes just 30 companies.
It also means that the Dow Jones has risen for nine trading days in a row, for the first time since 2017.
Tech Val in quarterly numbers
In the US stock market, there was a group of companies that stood out in particular on Thursday: Tesla fell 9.7 percent after letting market participants trade shares after reading the quarterly report for half a day.
The company provided quarterly numbers late Wednesday evening, revealing, among other things, that margins had taken a hit after dramatic price cuts earlier this year.
Despite the fact that the trading volume is higher than ever, and greater than analysts expected, the stake on the exchange has been sanctioned.
At the investor conference that followed the submission of the report, Musk and the rest of the management were unable to provide clear answers on either the specifications or the delivery date for the e-truck.
Netflix also fell significantly, releasing quarterly numbers a few minutes before Tesla late Wednesday night. The electric giant reported more new subscribers than expected, but at the same time guidance on future earnings was disappointing. The share price fell 8.4 percent.
15 companies account for most of the rise
Although Thursday ended up being a bit shaky for the US stock market, it has had a solid bullish ride so far this year.
The industry-dominated Dow has regained much of what it lost from the 2022 economic downturn early last fall, while the S&P 500 and, above all, the technology-oriented Nasdaq Composite have soared, driven in part by the euphoria of artificial intelligence in 2023.
The S&P 500 is up just under 19 percent so far in 2023, while the Nasdaq Composite can boast an increase of about 35 percent.
The rally is also concentrated on a small number of very large companies: The 15 largest companies in the S&P 500 are up an average of 35 percent, while the average company in the same index by comparison is up 4 percent.
Strategist at Aegon Asset Management Cameron McCrimmon takes this as a sign of an “aging bull”, i.e. a market at the end of a bull cycle.
The term “bull” is used for a market that is characterized by recovery, and it is claimed that the chart of, for example, a stock index in a bull market is moving up from left to right, like the back of a bull.
In the opposite case, in bear markets, the term “bear” is used – again to refer to the shape of a bear’s back.
TSMC is getting on the hump over low demand
For its part, chip maker TSMC provided quarterly numbers before the exchanges opened on Thursday, and the quarterly report revealed a 10 percent drop in trading volume from the second quarter of last year.
Both the upper and lower limits beat the analyst team’s expectations, but net income shrank for the first time since the same quarter of 2019.
TSMC, which stands for Taiwanese Semiconductor Manufacturing Company, is one of the world’s leading manufacturers of the most advanced processors, and it can be found in Apple phones and PCs, among other things.
The market for such electronics has weakened significantly since the pandemic — and this is cited as an explanation behind the poor quarterly result, he writes. CNBC.
Electronics manufacturers have done their best to secure microchips during the pandemic, of which there have been huge shortages at times, but companies themselves are now grappling with the ketchup effect and full stocks after consumers have tightened their wallets to an even greater extent.
Even the demand for hardware components used to train AI models is not enough to offset this.
It has led to a further drop in microchip prices, and TSMC now envisions that sales volume in all of 2023 will be 10% lower than a year ago, rather than the 5% lower it forecast three months ago.
New York-listed TSMC shares fell 4.9 percent after the figures were published.
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