[New York Market Watch]Stocks Mixed Despite Imminent End to Shutdown—Dollar Falls, Bond Market Closed

(Seoul=Yonhap Infomax) International Economics Department = On the 11th (U.S. Eastern Time), the three major U.S. stock indices closed mixed in the New York financial markets.

Stocks, which had surged on expectations of a resolution to the U.S. federal government shutdown, underwent a correction, particularly among technology shares.

The Philadelphia Semiconductor Index, composed of artificial intelligence (AI) and semiconductor-related stocks, plunged 2.48%, reflecting a cooling of investor sentiment.

The sharp drop in the Philly index was partly attributed to news that SoftBank had sold its entire stake in Nvidia.

However, traditional industrial stocks, such as pharmaceuticals, benefited as funds rotated out of tech stocks.

The U.S. dollar weakened. Disappointing U.S. private employment data dampened optimism over the end of the shutdown, putting downward pressure on the dollar.

The British pound was even weaker than the dollar, following the U.K.'s unemployment rate hitting a 4-year, 7-month high.

New York oil prices rose for a third consecutive session, as the prospect of a shutdown resolution fueled hopes for a demand recovery.

U.S. employment indicators pointed to a weakening trend.

According to private employment data provider ADP, preliminary U.S. private employment for the four weeks ending the 25th of last month fell by an average of 11,250 jobs per week. Previously, ADP reported that private employment in October increased by 42,000 from the previous month.

The bond market was closed for Veterans Day. While the New York Stock Exchange operated as usual, trading volume was relatively subdued compared to normal sessions.

Stock Market

On the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed up 559.33 points (1.18%) at 47,927.96.

The S&P 500 rose 14.18 points (0.21%) to 6,846.61, while the Nasdaq Composite fell 58.87 points (0.25%) to 23,468.30.

There was a clear rotation out of technology stocks and into blue chips.

U.S. stock indices had surged sharply from Friday afternoon through the previous session on optimism over a resolution to the federal government shutdown. The Nasdaq index jumped nearly 1,000 points from its intraday low of 22,563 on the 7th to 23,527 at the previous close.

The decline in tech stocks was seen as a correction following the steep rally.

In particular, the Philadelphia Semiconductor Index, composed of AI and semiconductor-related stocks, plunged 2.48%, signaling a cooling of investor sentiment.

The sharp drop in the Philly index was influenced by news that SoftBank Group had sold its entire stake in Nvidia for $5.83 billion, as disclosed in its Q3 earnings report.

This, combined with concerns over an AI bubble, fueled perceptions of a market peak. Nvidia, Broadcom, TSMC, and ASML all fell by more than 1%, while AMD dropped 2.65%. Of the 30 stocks in the index, 27 declined.

Oracle fell 1.94% and Palantir dropped 1.37% amid selling in AI-themed stocks.

Bill Fitzpatrick, portfolio manager at Logan Capital Management, said, "Tech companies are fast cash-flow generators. Given their current valuations, even minor negative news can quickly reverse investor sentiment and favor a rebound in value stocks."

Funds exiting tech stocks flowed into blue chips, with pharmaceutical stocks particularly strong. Eli Lilly, the largest pharma by market cap, rose 2.27%, and Amgen jumped 4.57%.

Traditional defensive stocks such as Walmart, Visa, and Coca-Cola also gained.

Notably, Apple rose 2.16% despite the tech sell-off. While less aggressive in AI infrastructure spending, Apple's robust cash flow and business structure stood out amid AI bubble concerns. The rally pushed Apple's market capitalization back above $4 trillion.

All sectors except technology advanced. Healthcare jumped 2.33%, while energy, materials, consumer staples, and real estate all rose more than 1%.

Among mega-cap tech firms with market caps over $1 trillion, Alphabet, Microsoft, and Amazon gained.

AMD fell despite projecting an average annual growth rate exceeding 35% at its Analyst Day, as it was swept up in the AI stock sell-off.

Michael Burry, one of the real-life models for the film "The Big Short," publicly criticized Oracle and Meta as overvalued, claiming their earnings were inflated.

Burry pointed to the artificial extension of asset lifespans to reduce depreciation expenses as "one of the most common earnings inflation tactics in modern accounting," specifically naming Oracle and Meta.

U.S. employment indicators pointed to a weakening trend.

According to ADP, preliminary U.S. private employment for the four weeks ending the 25th of last month fell by an average of 11,250 jobs per week. Previously, ADP reported that private employment in October increased by 42,000 from the previous month.

The bond market was closed for Veterans Day. While the New York Stock Exchange operated as usual, trading volume was relatively subdued compared to normal sessions.

According to the CME FedWatch Tool, the probability of the federal funds rate remaining unchanged in December was 32.6%, down from 37.6% at the previous close.

The CBOE Volatility Index (VIX) fell 0.32 points (1.82%) to 17.28.

Foreign Exchange Market

According to Yonhap Infomax (screen number 6411), as of 16:00 in New York, the dollar-yen exchange rate stood at 154.126 yen, up 0.096 yen (0.062%) from the previous New York close of 154.030 yen.

The euro-dollar rate was $1.15834, up $0.00195 (0.169%) from the previous session.

Frank Elderson, Executive Board Member of the European Central Bank (ECB), said, "The risks of inflation coming in higher or lower than expected are balanced." He added, "Recent news has been relatively positive, and some of the risks we were concerned about are gradually receding."

The dollar index (DXY), which measures the value of the dollar against six major currencies, fell 0.116 points (0.117%) to 99.453.

The dollar came under pressure during the New York session following weak private employment data.

According to ADP, preliminary U.S. private employment for the four weeks ending the 25th of last month fell by an average of 11,250 jobs per week.

This contrasts with ADP's monthly National Employment Report (NER) released last week, which showed private employment in October increased by 42,000 from the previous month.

ADP noted, "The data suggests that job creation remained challenging in the latter half of October," adding, "Among market participants, there is a growing perception that employment growth will remain subdued for an extended period due to declining labor demand and labor supply shortages."

The dollar index fell as low as 99.284 during the session, amid expectations of a Federal Reserve rate cut.

The U.S. government shutdown appears to be ending. The House of Representatives is scheduled to vote on the Republican interim budget bill, which passed the Senate on the 12th. With Republicans holding a majority in the House, passage is likely. Once President Donald Trump signs the bill, the shutdown will officially end.

Sam Stovall, Chief Investment Strategist at CFRA, said, "The market expects the shutdown to be over. People will return to work, economic data will be released again, and uncertainty will recede."

Marc Chandler, Chief Market Strategist at Bannockburn Forex, commented, "Once the government reopens, we will start to see cracks everywhere. The fundamental investment sentiment toward the dollar remains negative."

The pound-dollar rate was $1.31614, down $0.00199 (0.151%) from the previous session.

According to the UK Office for National Statistics (ONS), the unemployment rate for July-September was 5.0%, above the market forecast of 4.9% and the highest in 4 years and 7 months.

Sanjay Raja, Chief UK Economist at Deutsche Bank, said, "Today's data should give the Bank of England confidence to cut policy rates further by year-end."

The offshore dollar-yuan (CNH) rate was 7.1220 yuan, up 0.0007 yuan (0.010%) from the previous session.

Oil Market

On the New York Mercantile Exchange, December West Texas Intermediate (WTI) crude rose $0.91 (1.51%) to settle at $61.04 per barrel, the highest close since the 3rd.

The U.S. Senate held a vote on the federal government's interim budget bill the previous night, passing it 60-40. With the Republican-controlled House expected to approve it, passage is likely.

The House vote is expected as early as the 12th. Once President Donald Trump signs the bill, the longest shutdown in history, which began on the 1st of last month, will finally end.

Phil Flynn, Senior Analyst at Price Futures Group, said, "Optimism over the government reopening is boosting expectations for increased demand."

There are also concerns that U.S. sanctions on Russia could tighten supply. Russia's major oil company Lukoil, which was sanctioned by the U.S. Treasury last month, reportedly declared force majeure on the West Qurna-2 oil field in Iraq.

Tamas Varga, analyst at PVM, said, "New U.S. sanctions on Russia's major oil producers and exporters are weighing on product exports."

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kphong@yna.co.kr

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