Wall Street weighed down by technology stocks, ASX set to slide
Staff writers
Updated ,first published
While the Australian stock market fell at the opening, declines in some influential technology stocks sent Wall Street lower overnight.
The S&P/ASX 200 fell 57.2 points, or 0.7 per cent, to 8665.7 in early trade, contributing to Wednesday’s 0.6 per cent loss as it started the new financial year. The Australian dollar was trading at 68.88¢.
The S&P 500 lost 0.2 percent overnight, its eighth loss in 11 days. The Dow Jones Industrial Average fell 13 points (less than 0.1 percent) and the Nasdaq composite fell 0.7 percent.
General Mills led the market and rose 8.5 percent after the company behind the Cheerios and Progresso brands reported better results than analysts expected in the last quarter. It also announced a plan to cut costs by US$3 billion ($4.4 billion) over four years.
Three in five stocks in the S&P 500 rose in the same way, with the index posting an early 0.7 percent decline following a report that said U.S. manufacturing grew at a slightly slower pace than economists expected last month. The Institute for Supply Management’s survey also noted that prices were rising at a slower pace.
The data could ease some upward pressure on inflation, making it less likely that the Fed will raise interest rates more than once this year. Following the report, the yield on the 10-year Treasury bond fell to 4.47 percent, falling from its peak of around 4.50 percent in the morning.
This provided some relief because higher yields make it more expensive for businesses and households to borrow money and can therefore slow the economy. Higher yields also tend to lower the prices of stocks and other investments. Yields have been rising since the war with Iran began due to concerns about high inflation caused by expensive oil.
The heaviest weights in the market were stocks that had previously surged on enthusiasm for artificial intelligence technology, including declines of 10.6 percent for Micron Technology, 6.9 percent for Advanced Micro Devices and 1.3 percent for Nvidia.
These stocks have been zigzagging in recent weeks amid concerns that they have become too expensive. They also have a big impact on the S&P 500 and other indices because they have grown so much in size.
Kroger swung from an early loss to a gain of 1.3 percent after the grocer said it agreed to buy Giant Eagle for $1.25 billion in cash. It will also assume a $400 million obligation to acquire the food and pharmacy retailer with stores stretching from Indiana to Maryland.
Nike also reversed its initial loss and rose 4.9 percent after reporting stronger results than analysts expected in the latest quarter. The athletic equipment giant is in the midst of CEO Elliott Hill’s turnaround attempt, and he said it still faces headwinds that are hurting its revenue.
In total, the S&P 500 index decreased by 16.13 points to 7,483.23 points. The Dow Jones Industrial Average fell 13.96 points to 52,305.24, and the Nasdaq composite fell 173.69 points to 26,040.03 points.
The gold price recovered after an early rise. The price, which was over $5,300 per ounce earlier this year, fell below $3,980 per ounce overnight. When the Treasury pays more interest, investors become less willing to pay high prices for investments. This includes gold, which pays nothing to its owners.
However, the weaker-than-expected manufacturing report and the subsequent easing in Treasury yields led gold to settle at $4,082.40 per ounce, up 1.1 percent.
Prices fell in the oil market as hopes persisted that the United States and Iran would end their war and reopen the Strait of Hormuz to oil tankers carrying crude oil. The barrel price of Brent crude oil, the international standard, decreased by 1.9 percent to $71.57.
In foreign stock markets, indices in Europe and Asia were mixed.
South Korea’s Kospi index fell 2 percent, one of the world’s biggest moves. SK has become one of the world’s brightest stars thanks to the enthusiasm generated by Hynix and other AI stocks, and the index is still up 97 percent for the year so far.
In Tokyo, the Nikkei 225 rose 0.6 percent after the Japanese yen fell to a 40-year low against the U.S. dollar.
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