S&P 500 Slips for the Fourth Consecutive Day, Other Stock Indices Also Decline

On Wall Street on Tuesday, S&P 500 slipped for the fourth consecutive day, and other stock indices also fell, primarily due to the continued decline in stock prices of major technology companies. The Dow Jones fell by 1.07 percent to 46,091 points, while the S&P 500 dropped by 0.83 percent to 6,617 points, and the Nasdaq index decreased by 1.21 percent to 22,432 points.

Technology Sector

As in previous days, the technology sector was under the most pressure yesterday as investors fear that stock prices in this sector are too high. This sector has been growing strongly for a long time, thanks to the euphoria surrounding the development of artificial intelligence, but now some investors believe that technology stock prices are too high, thus reallocating capital from this sector to others. The stock prices of Nvidia, Microsoft, and Amazon fell yesterday between 3 and 4 percent.

Investors are cautious also because Nvidia, the world’s largest company by market capitalization, is set to release its quarterly business report on Wednesday, which could significantly impact the entire technology sector. Nvidia’s report could show whether the stock price of this chip manufacturer is sustainable. Since the launch of ChatGPT in November 2022, Nvidia’s stock price has increased by about 1,000 percent, and more than 40 percent since the beginning of this year, leading to the company’s market value recently exceeding $5 trillion.

Labor Market Conditions

Investors are also restrained due to the expectation of several important macroeconomic reports this week, including employment data for September, which will indicate the state of the U.S. economy. Due to the shutdown of U.S. federal agencies, there have been no official reports since October 1, so investors want to see whether the official report will show that the labor market is weakening, as less comprehensive reports from private institutions have indicated in recent weeks. The uncertainty regarding interest rates from the U.S. central bank is also negatively affecting the market.

Not long ago, it was expected that the Fed would reduce interest rates by 0.25 percentage points in December, as it did in September and October. However, this is becoming less certain as many Fed officials cautiously indicate that inflation remains significantly above the target levels of around 2 percent.

Decline in Europe and Asia

Stock prices also fell on European exchanges yesterday. The London FTSE index slipped by 1.27 percent to 9,552 points, while the Frankfurt DAX plummeted by 1.74 percent to 23,180 points, and the Paris CAC fell by 1.86 percent to 7,967 points. On Asian exchanges on Wednesday, stock prices fell, primarily in the technology sector, similar to yesterday on Wall Street, while the value of the dollar against a basket of currencies stagnates.

MSCI index of Asia-Pacific stocks, excluding Japan, was down 0.3 percent around 7:00 AM. Meanwhile, stock prices in Japan, Australia, Hong Kong, and South Korea fell between 0.1 and 0.8 percent. In India and Shanghai, however, they rose by about 0.1 percent.

Currency Market Stagnates, Oil Prices Decline

On the currency markets, the value of the dollar against a basket of currencies stagnates. The dollar index, which shows the value of the U.S. dollar against the other six major world currencies, is around 99.60 points this morning, the same as yesterday at this time. Meanwhile, the dollar’s exchange rate against the Japanese currency slipped by 0.11 percent to 155.30 yen. The U.S. currency also weakened against the euro by about 0.10 percent, bringing the euro price to 1.1590 dollars.

Oil prices, on the other hand, have slightly declined. On the London market, the price of a barrel fell by 0.25 percent to $64.75, while on the U.S. market, a barrel decreased by 0.23 percent to $60.60.