New York Stock Market Technology Stocks Lead Decline, S&P 500 and Nasdaq Drop Over 0.5%, Small and Mid-cap Stocks Rise Against the Trend

Source: BlockMedia Original Title: [New York Stock Market Close] Tech Stocks Weak, S&P 500 and Nasdaq Drop 1%… Small and Mid-Caps Rise Original Link:

Market Overview

Most major indices on the New York Stock Exchange closed lower on the 14th. Due to a combination of weak performance in large tech stocks, geopolitical risks, and concerns over the Federal Reserve’s independence, investor sentiment contracted, but some small-cap stocks successfully rebounded, leading to market divergence.

The Dow Jones Industrial Average closed at 49,149.63 points, down 42.36 points or 0.09% from the previous trading day; the S&P 500 closed at 6,926.97 points, down 0.53%; the Nasdaq Composite, which has a higher proportion of tech stocks, closed at 23,471.749 points, down 1.00%. Meanwhile, the Russell 2000 index closed at 2,648.302 points, up 0.58%, with continued inflows into small and mid-cap stocks.

Tech Stocks Lead Decline, Chip Sector Under Pressure

The market decline was mainly driven by technology stocks, especially the semiconductor sector, which performed poorly. Chip manufacturers collectively declined, with one chip design company dropping 5%, a processor manufacturer down 2%, and a memory chip company down 1%. Reports indicate that Chinese customs have banned imports of certain high-end chips from a specific company, and intensified US-China technological competition has added pressure to the semiconductor industry.

Financial Sector Underperforming

The earnings reports of major banks also fell short of market expectations. A large bank reported Q4 revenue below expectations, with its stock falling over 5%. Two other large banks, despite solid performance, saw their stock prices decline by 7% and 8%, respectively, dragging down the overall financial sector. This partly reflects the impact of the recent proposal by the President to reform credit card interest rates.

Political Risks Heighten Market Concerns

Political risks have also negatively affected investor sentiment. Amid ongoing criticism of the Federal Reserve Chair by the President, reports emerged that the Department of Justice has launched a criminal investigation into the Fed Chair, raising concerns about the independence of the Federal Reserve.

An chief investment officer of an investment firm stated, “An increase in the Producer Price Index is likely to be reflected in future core PCE, which could significantly constrain the Fed’s interest rate policy. The debate over the Fed’s independence has further exacerbated market turmoil.”

Geopolitical Risks Persist

Geopolitical risks remain a focus. The President hinted at US intentions to intervene in Iran, escalating tensions with Iran. Oil prices have risen for five consecutive days, increasing by over 1% on the day. The President also reiterated plans to incorporate Greenland into US territory, calling it “a necessary factor for US security and development,” further heightening diplomatic tensions.

Small and Mid-Caps Rise Against the Trend

Against this backdrop, the Russell 2000 index, which is more heavily weighted toward domestic demand-driven small and mid-cap stocks, rose, contrary to the trend of large-cap stocks. This is interpreted as some funds shifting into sectors less affected by tech and geopolitical issues.

Market Outlook

The market is expected to remain highly volatile in the near term. Experts say, “Policy uncertainty and doubts about the Fed’s independence are deepening among investors. Future movements will be influenced by key economic indicators, the Fed’s responses, and further statements from the presidential administration.”