Wall Street mixed amid tech stock and Fed worries

Photo caption — Traders at the New York Stock Exchange, USA. Photo: THX/TTXVN

At the end of the trading session on November 14, the Dow Jones Industrial Average fell 309.74 points (0.65%) to 47,147.48 points. The S&P 500 Index lost 3.38 points (0.05%) to 6,734.11 points. In contrast, the Nasdaq Composite Technology Index rose slightly by 30.23 points (0.13%) to 22,900.59 points.

Last week, the US stock market had some strong "shaken" sessions, reflecting the tug-of-war between optimism about the government reopening and growing concerns about technology stock valuations as well as Fed policy.

The trading week started with strong gains on November 10 and 11, fueled by hopes of an end to the US government shutdown. However, the tech sector's rally began to slow due to concerns about skyrocketing valuations.

By November 12, the market had begun to diverge. The Dow Jones Industrial Average hit a new record high thanks to the rise of value stocks like Goldman Sachs and UnitedHealth, while investors turned away from technology stocks, causing the Nasdaq to fall.

Selling pressure peaked on November 13, sending all three major indexes to their biggest one-day percentage declines in more than a month. The sell-off was fueled by weakness in Nvidia and AI-focused stocks, along with investors reducing expectations for a Fed rate cut due to inflation concerns.

Market sentiment stabilized on the final session of the week on November 14, as technology stocks recovered slightly. For the week, the Dow Jones index increased 0.3% and the S&P 500 inched up 0.1%, while the Nasdaq fell 0.5%.

According to Mr. Andrew Slimmon, senior portfolio manager at investment management firm Morgan Stanley Investment Management, the Wall Street market was supported by "bottom-fishing" buying pressure on stocks that have fallen sharply in the past few days.

However, the market driver this week has been hawkish comments from Fed officials, with more policymakers showing reluctance to continue easing monetary policy, citing signs of a stabilizing labor market and concerns about the inflation outlook.

The comments sent markets sharply lower on bets that the Fed will act. The probability of a rate cut in December has fallen to about 46% from 66.9% last week, according to the CME Group's FedWatch tool.

But despite a volatile week, many analysts remain optimistic. Keith Lerner, chief investment officer at Truist Advisory Services, said the stock market still deserves some credit. He pointed out that the S&P 500 hasn’t had a correction of more than 5% since April.

Next week promises to be a key test for Wall Street, with a slew of major financial reports and the US government resuming the release of key economic data. The focus will be on the quarterly earnings report from chip giant Nvidia, scheduled for November 19, which promises to provide more insight into the state of the AI “fever”. In addition, reports from major retailers will also shed more light on the situation of consumer spending.

On the data front, although the US government has reopened after a 43-day shutdown, the release of economic reports will be delayed. According to Mike Skordeles, head of US economics at financial services firm Truist, it will be difficult to get a clear picture of the economy this quarter before the next Fed meeting on December 9-10.

Investors will also continue to closely monitor the performance of technology stocks and market sentiment indicators to assess whether the recent sell-off is the start of a larger correction.

Overall, the market is facing a lot of conflicting flows. According to Viktor Shvets, head of global strategy at investment bank Macquarie Capital, uncertainty will certainly continue to be the dominant factor in the market in the coming time.