"Another Day in the Red" Semiconductor Stocks Drag Nasdaq Down... Dow Hits Record High [New York Stock Market]

June Non-Farm Payrolls Fall Far Short of Expectations
Interest Rate Hike Expectations Partially Retreat

On July 2 (local time), the three major U.S. indexes closed mixed. The Nasdaq declined as semiconductor stocks remained weak for the second consecutive trading day, leading to reduced investor sentiment. However, the Dow Jones Industrial Average set a new all-time high as expectations for a rate hike eased somewhat after the June nonfarm payrolls report came in significantly below forecasts.

Reuters Yonhap News

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average rose by 594.83 points (1.14%) from the previous session to close at 52,900.07. The S&P 500 index, which focuses on large-cap stocks, edged up by 0.01 points (0.00%) to 7,483.24, while the technology-heavy Nasdaq index fell by 207.36 points (0.80%) to 25,832.67.

Major semiconductor stocks plunged, dragging down the Nasdaq index. Nvidia closed down 1.41%, Micron down 5.45%, Intel down 5.22%, AMD down 4.26%, and the VanEck Semiconductor ETF (SMH) down 4.50%.

Anshul Sharma, Chief Investment Officer at Savvy Wealth, commented, "While it could be a case of money rotating from sectors that have been hot in recent months to others, I believe we are seeing a reassessment of investments in artificial intelligence (AI) itself. If companies become more sensitive to computing costs, the next area of focus could be the cost of computing."

The nonfarm payrolls report released in the morning also drew market attention. The U.S. Department of Labor’s Bureau of Labor Statistics announced that nonfarm payrolls increased by 57,000 in June compared to the previous month, well below the 115,000 increase expected by experts surveyed by Dow Jones. The job gains for April and May were also revised down by 31,000 and 43,000, respectively, resulting in a combined reduction of 74,000 jobs over those two months.

The unemployment rate fell slightly to 4.2% from 4.3% in the previous month, below the market forecast of 4.3%. However, the decline in the unemployment rate cannot be interpreted solely as an improvement in the labor market. The labor force participation rate dropped to 61.5%, the lowest since March 2021. The Wall Street Journal (WSJ) reported that the labor force shrank by 720,000 between May and June, analyzing that strict immigration policies and baby boomer retirements may have contributed to the reduction in the workforce.

New York Stock Exchange. New York, USA - Special Correspondent Yoonjoo Hwang

Due to these employment figures, there are now expectations that the Federal Reserve (Fed) may pause rate hikes, leading to a decline in yields on two-year U.S. Treasury bonds.

Bradford Smith, portfolio manager at Janus Henderson Investors, said, "As we learn how the Fed's policy reaction function will be shaped under Chairman Kevin Warsh, this jobs report has eased the pressure for the Fed to raise rates in the short term."

Brett Kenwell of eToro also explained, "Just when investors thought they had a good grasp on the labor market, the June jobs report threw an unexpected variable," adding, "Since the pressure for the Fed to take a hawkish stance is lessened, there could be a positive aspect for risk appetite."

International oil prices rose slightly. On the New York Mercantile Exchange, West Texas Intermediate (WTI) crude for August delivery increased by 0.2% to $68.69 per barrel. Brent crude for September delivery on the ICE Futures Exchange rose by 0.2% to $71.80 per barrel.

Gold prices climbed on the back of weaker-than-expected nonfarm payroll figures. On the afternoon of this day, gold futures for August delivery traded on the COMEX of the Chicago Mercantile Exchange (CME) group rose 1.33% from the previous session to $4,136.7 per troy ounce.

This content was produced with the assistance of AI translation services.