Although stocks started the day on a positive note, with all major U.S. indices posting solid gains, the second half of the day brought unwelcome news to the market. Semiconductor stocks continued to slide as the market further digested information from last week's tech giants' earnings, with concerns about future infrastructure spending levels lingering.
Other than the Dow Jones Industrial Average, a more defensive index that rose 214 points to 51,984, all other major U.S. stock indices took a dive. The NASDAQ lost another 1.07% to 25,164. The S&P 500 slid half a percent to 7,541. The decline could be largely attributed to the 2.75% loss in the technology sector. The energy sector posted even heavier losses of 3.74% as oil prices dropped. All other sectors posted strong gains, but they were unable to bring the overall market into positive territory due to the high concentration of technology stocks in today's market.
Although oil prices have dropped significantly, the bond market did not see substantial improvements, with both the 5-year and 10-year U.S. Treasury yields declining by a measly 1 basis point to 4.71% and 4.92%, respectively. This signals continued concerns about U.S. deficits as well as liquidity pressures coming from corporations.
Today's U.S. manufacturing report showed continued acceleration in the sector, exceeding economists' expectations. It is difficult to tell whether the current pace of expansion is sustainable, as the prices-paid subindex remains at a severely elevated level.
Tomorrow, we will cover Apple’s and Palantir’s earnings to help gauge the direction of the global consumer economy and the profitability of the AI software industry.