[New York Stock Exchange] Semiconductor Weakness Outweighs Drop in Long-term Yields... Nasdaq Falls 0.77%

Oil Prices Fall as Investors Take Profits

On August 24 (local time), the three major indices of the New York Stock Exchange ended mixed, as the weakness in semiconductor stocks offset the impact of falling long-term U.S. Treasury yields.

At the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 53,417.16, up 140.15 points (0.26%) from the previous session. The S&P 500, focused on large-cap stocks, finished at 7,652.86, down 21.51 points (0.28%). The tech-heavy Nasdaq ended at 25,980.19, falling 200.26 points (0.77%).

New York Stock Exchange view. New York, USA Photo by Yoonjoo Hwang

The weakness in semiconductor stocks put overall pressure on the market. Nvidia dropped by 2.91% from the previous day, marking its longest losing streak since 2022 with declines for seven consecutive sessions. Bloomberg reported that industry concerns about rising costs have emerged on news that some major customers could see AI-related memory prices hiked by over 15%.

Among other notable declines: Micron Technology fell by 5.83%, AMD by 3.49%, and Broadcom by 2.63%. Other technology stocks also showed weakness, with Coherent down 4.85%, Lumentum down 4.22%, SanDisk down 6.45%, and Seagate Technology down 6.51%.

In contrast, U.S. Treasury yields declined amid reports that the Treasury Department is considering utilizing funds from the Treasury General Account (TGA) for Treasury buybacks. The 10-year U.S. Treasury yield fell more than 3 basis points (1 bp = 0.01 percentage point) to 4.704%. The 30-year Treasury yield, which exceeded 5.3% last week for the highest level in nearly 20 years, also fell 4 basis points to 5.234% on the same day.

CNBC reported that the U.S. Treasury Department could use approximately 1 trillion dollars in TGA funds for long-term Treasury buybacks. Scott Bessent, U.S. Secretary of the Treasury, previously stated last week that the Treasury could at least double the size of buybacks for long-term Treasuries, and might further increase the per-buyback amount from the initially announced 4 billion dollars.

However, there is still skepticism in the market as to whether the expansion of Treasury buybacks can sustainably lower long-term yields. This is because long-term yields dropped temporarily after the initial announcement about increasing buybacks, but soon climbed again, suggesting the effect did not last.

Peter Boockvar, Chief Investment Officer (CIO) at OnePoint BFG Wealth Partners, said, "The Treasury's attempt to issue more short-term debt to restrain long-term yields will make the U.S. government's interest costs even more closely linked to the Federal Reserve's policy rate moves." He added, "While it is unlikely that Chair Kevin Warsh will mention this in his speech on Friday, it has become a new variable that must be addressed going forward."

Iran War Drags On... Inflation Concerns Add Market Pressure

Additionally, anxiety over a prolonged war involving Iran further weighed on investor sentiment. As the United States intensified economic pressure on Iran, concerns continued that if the conflict drags on, international oil prices may remain high and reignite inflationary pressures.

However, international oil prices ended lower. On the New York Mercantile Exchange, October delivery West Texas Intermediate (WTI) crude fell 2.35% from the previous session to finish at $85.01 a barrel. On the London ICE Futures Exchange, October delivery Brent crude dropped 2.35% to close at $92.17 a barrel.

U.S. President Donald Trump’s announcement that tariffs on Canadian cars, trucks, auto parts, and steel products will be increased to 50% starting January 1 next year also acted as a headwind for the stock market.

Robert Konzo, CEO of The Wealth Alliance, described the current market as "a somewhat typical summer lull," but forecasted that if corporate earnings continue to grow and upcoming inflation indicators meet expectations, conditions for the stock market could improve.

Market attention is shifting to inflation and corporate earnings data to be released this week. On August 26, the Personal Consumption Expenditures (PCE) price index for July, the Fed's preferred inflation gauge, will be published. Nvidia will also release its results on the same day, while Marvell Technology is set to disclose its earnings on August 27.

Additionally, markets are closely watching what message Fed Chair Kevin Warsh will deliver at the Federal Reserve's annual economic policy symposium in Jackson Hole this week.

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