The US stock market experienced mixed movements on Thursday as investors adjusted their portfolios amid concerns about rising inflation and higher borrowing costs. The Nasdaq 100 index dropped more than 300 points, while the Dow Jones Industrial Average rose over 200 points. This divergence reflects a sectoral rotation where investors are reducing exposure to technology stocks and increasing investments in defensive sectors such as consumer staples, retail, and food and beverage companies.
- The Nasdaq 100 fell over 300 points due to a selloff in technology stocks.
- The Dow Jones rose more than 200 points, driven by gains in defensive sectors.
- Chip makers like Micron Technology and NVIDIA saw share prices drop up to 5%.
- Retailers such as Walmart and companies like Coca-Cola experienced share price increases.
- Bond yields retreated from recent highs, easing some market fears.
- Brent crude oil prices recovered after an intraday dip amid geopolitical tensions.
Why did the Nasdaq 100 fall sharply?
The Nasdaq 100 index declined sharply as investors sold off technology stocks. Shares of major chip makers including Micron Technology, Advanced Micro Devices, Marvell Technology, Intel Corporation, Qualcomm, and NVIDIA dropped as much as 5%. The decline was driven by concerns over rising borrowing costs and their potential impact on spending for artificial intelligence infrastructure. This selloff followed a similar trend in Asian markets earlier in the day.
What caused the Dow Jones to rise?
The Dow Jones Industrial Average increased by over 200 points, supported by gains in defensive stocks. Investors shifted their focus to sectors that tend to be more resilient during economic uncertainty, such as consumer staples, retail, and food and beverage companies. Shares of Walmart rose 2.8%, Amgen increased by 1.8%, and Coca-Cola gained 1.7%. Other companies like Johnson & Johnson, McDonald's, Nike, and Procter & Gamble also saw gains up to 1.5%.
How did bond yields and oil prices react?
Bond yields retreated from their peaks reached on Wednesday. The US 10-year Treasury yield fell to 5.05% after hitting 5.34%, while the 30-year yield dropped below 5.4%, and the 2-year yield decreased to 4.7%. This pullback helped alleviate some investor fears about rising borrowing costs. Meanwhile, Brent crude oil prices recovered most of their intraday losses, trading back above $105 per barrel after dipping to $103. The recovery came despite escalating tensions in the Middle East following claims by Houthi rebels of shooting down a Saudi Arabian fighter jet.
What impact did the US market movements have on Asian markets?
Following the decline in US technology stocks, tech shares in Korea and Japan also fell to three-month lows. Korean chip makers SK Hynix and Samsung Electronics saw their shares plunge as much as 10%, pushing the Korean benchmark index KOSPI to trigger circuit-breaker levels with an 8% drop. This reflects the global influence of US market trends, especially in the technology sector.
