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[New York Stock Market Briefing] Alphabet Overcomes 'Earnings Shock' with Interest Rate Drop, Closes Higher

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Korea Economic Daily
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  • The New York stock market reported that major indices closed higher, supported by a drop in bond yields.
  • Despite Alphabet's poor earnings, bargain buying helped overcome the decline.
  • The poor performance in cloud revenue was identified as the main reason for Alphabet's stock drop.
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  • The article was summarized using an artificial intelligence-based language model.
  • Due to the nature of the technology, key content in the text may be excluded or different from the facts.

On the 5th (local time), before ringing the 'Opening Bell' to commemorate the listing at the New York Stock Exchange, SEC Chairman Gary Gensler is broadcasting./New York=Kim Beom-jun ReporterOn the 5th (local time), before ringing the 'Opening Bell' to commemorate the listing at the New York Stock Exchange, SEC Chairman Gary Gensler is broadcasting./New York=Kim Beom-jun Reporter

In the New York stock market, major indices initially fell due to Alphabet, the parent company of Google, reporting lower-than-expected earnings. However, they turned upward and closed higher as bond yields fell.

On the 5th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average rose 317.24 points (0.71%) to 44,873.28, the Standard & Poor's 500 Index increased by 23.60 points (0.39%) to 6,061.48, and the Nasdaq Composite Index gained 38.31 points (0.19%) to close at 19,692.33.

In the early session, the market fell due to Alphabet's disappointing earnings announced after the previous day's close, but it reversed to rise. Analysts attribute this to the drop in bond yields.

Bond yields plummeted after the U.S. Treasury announced it would maintain its bond issuance plan until April. The Institute for Supply Management (ISM) Services Purchasing Managers' Index (PMI) also came in at 52.8, below market expectations, supporting the decline in bond yields.

Alphabet's A shares dropped 7.30%, and C shares fell 6.94%. Although both revenue and earnings per share (EPS) exceeded market expectations, the cloud segment's revenue, which drew significant market attention, fell short, leading to a sell-off.

AMD, expected to rival NVIDIA, also reported better-than-expected overall earnings after the previous day's close but ended the day down 6.30%. This was due to the data center AI semiconductor segment, a major revenue source, falling short of expectations.

The 'Magnificent 7,' referring to seven giant tech companies, saw mixed stock performances.

NVIDIA jumped 5.21% on bargain buying, while Microsoft and Meta were slightly up.

On the other hand, Amazon fell 2.43%, Tesla dropped 3.58%, and Apple was slightly down.

Apple faced negative news as Chinese regulators prepared an antitrust investigation into the Apple App Store.

Amazon was negatively affected by U.S. government regulations related to Chinese deliveries.

By sector, consumer discretionary fell 1.59%, and communication services dropped 2.79%.

In contrast, finance, healthcare, real estate, technology, and utilities rose by more than 1%.

According to the Chicago Mercantile Exchange (CME) FedWatch Tool, the probability of a 25 basis point cut in the federal funds rate by March is about 16.5%, similar to the previous day's close.

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) fell 1.44 points (8.37%) to 15.77.

Reporter Han Kyung-woo, Hankyung.com case@hankyung.com

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