[New York Stock Market Briefing] Shockwaves from the U.S. Fed Persist... Major Indices Fail to Rebound [New York Stock Market Briefing]

Micron Stock Down 16%↓

On the 19th (local time), the New York stock market showed mixed trends in a flat range. It still seems unable to escape the shock of the 'hawkish rate cut' by the U.S. Federal Reserve (Fed) from the previous day.

On this day, the Dow Jones Industrial Average on the New York Stock Exchange closed at 42,342.24, up 15.37 points (0.04%) from the previous day. The Dow index barely managed to rebound after 11 trading days, but it only rose slightly. Until the previous day, the Dow had fallen for 10 consecutive trading days, entering the longest bear market since 1974.

On the other hand, the large-cap benchmark Standard & Poor's (S&P) 500 Index fell 5.08 points (0.09%) to 5,867.08, and the tech-heavy Nasdaq Composite Index fell 19.92 points (0.10%) to 19,372.77. As the uncertainty of the Fed's monetary policy increased, investors seemed unable to find direction on this day as well.

Investors are concerned about the dot plot released at the Federal Open Market Committee (FOMC) the previous day. The forecast for the number of rate cuts next year, which was initially four, has been reduced to two. As the Fed mentioned persistent inflation as the background for adjusting the pace of rate cuts, there is an element of anxiety for investors that it may switch to rate hikes after a rate freeze, contrary to the initial plan.

Jerome Powell, the Fed Chair, made it clear the previous day that "we will not rush to cut rates in a situation where the economic recovery is strong and inflation could recur."

The economic indicators released on this day supported this. The U.S. Department of Commerce announced that the U.S. gross domestic product (GDP) growth rate (final figure) for the third quarter was calculated at 3.1% (annualized rate compared to the previous quarter).

It was revised up by 0.3 percentage points from the provisional figure (2.8%) announced a month ago, and it exceeded the expert forecast (2.9%) compiled by Dow Jones. The upward revision of exports and personal consumption was reflected in the upward adjustment of the final figure, raising the overall figure. In particular, the personal consumption expenditures (PCE) inflation rate, which the Fed mainly refers to when deciding on rate cuts, was revised up to 2.2%.

The Chicago Board Options Exchange (CBOE) volatility index, known as Wall Street's fear gauge, recorded a five-and-a-half-month high of 28.32 the previous day but retreated to 24.09 on this day.

The 'Magnificent 7', which had plunged the previous day, showed mixed trends. Apple (0.7%), NVIDIA (1.37%), and Amazon (1.26%) rebounded, while Microsoft (-0.08%), Alphabet (-0.24%), Meta (-0.27%), and Tesla (-0.9%) declined.

Micron Technology, a U.S. memory semiconductor company, saw its stock plummet by 16.18% on this day after presenting a poor performance outlook (guidance) the previous day. The daily drop is the largest since March 2020.

Micron projected that its second-quarter (December to February) revenue ($7.9 billion) would fall more than 10% below Wall Street's forecast, and its earnings per share ($1.53) would fall about 25% short of the forecast.

The Philadelphia Semiconductor Index, a collection of major semiconductor stocks, also fell by 1.6%.

No Jung-dong, Hankyung.com reporter dong2@hankyung.com