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US Stocks Extend Losses, ARM Drops Over 4%, S&P and Nasdaq Decline for the Second Consecutive Week

Sep 15, 2023 #US Stocks

US stocks experienced a decline on Friday as the Dow dropped nearly 300 points. Investors are growing increasingly concerned about a potential slowdown in the semiconductor industry while weighing the impact of the ongoing strike among Detroit automakers. By the closing bell, the Dow fell 0.83%, the S&P 500 index dropped 1.22%, and the Nasdaq declined by 1.56%.

Major tech stocks faced widespread declines, with Meta and Nvidia falling over 3.6%, Amazon dropping nearly 3%, and Microsoft down 2.5%. Apple, Tesla, Google’s parent company Alphabet also saw modest declines. ARM, which surged nearly 25% on its debut day, plummeted by 4.47%, with a market capitalization exceeding $65 billion.

In the Chinese concept stock sector, many saw declines, with KE Holdings dropping over 4%, New Oriental and TAL Education falling over 2%, and Vipshop, Alibaba, and Baidu slipping over 1%. Bilibili, JD.com, XPeng, Netease, among others, experienced slight declines. However, Yum China surged over 3%, and companies like Ctrip, NIO, and Pinduoduo had minor gains.

The Dow closed the previous week with a 0.12% increase. Nevertheless, both the S&P 500 index and the Nasdaq have seen declines for the second consecutive week, falling by 0.16% and 0.39%, respectively.

Tech stocks were leading the decline, with TSMC reportedly notifying its suppliers to delay some orders due to concerns about slowing growth in the sector. The iShares Semiconductor ETF fell over 3% on Friday.

The United Auto Workers (UAW) initiated a strike against Detroit’s top automakers, marking the first time in history that the “Big Three” – Ford, General Motors, and Stellantis – have had simultaneous strikes. Approximately 13,000 autoworkers went on strike amid the transition from gasoline-powered to electric vehicles, demanding wage increases.

Investors are now shifting their focus to the upcoming Federal Reserve meeting next week. The market currently anticipates the Fed to maintain interest rates unchanged as signs of inflation cooling emerge.

According to the CME FedWatch tool, traders are still betting with a 97% probability that the Fed will keep rates steady at the policy meeting on September 20, with a 67% likelihood of a rate pause in November.

Data shows that China’s industrial output in August exceeded expectations. Thursday’s data revealed that US retail sales in August surpassed forecasts, alleviating concerns about an economic downturn.

On Thursday, the August Producer Price Index (PPI) indicated that core PPI was under control, but overall data showed a larger-than-expected increase. Meanwhile, Wednesday’s release of the August Consumer Price Index (CPI) showed a slight uptick in core CPI for the month.

The University of Michigan Consumer Sentiment Survey indicated that one-year inflation expectations for September dropped to 3.1%, the lowest level since January 2021. Furthermore, five-year inflation expectations declined to 2.7%, the lowest level since December 2020.