[Wall Street Close | [October 5] Nasdaq hits record high thanks to the strength of NVIDIA and Microsoft... Three major indices rise

NASDAQ 1.05%, S&P 500 0.66%↑… Large technology stocks lead the rise

Caution on interest rate hike in October eased… Semiconductor stocks such as Intel and Micron are mixed.

The New York stock market rose thanks to the strength of large technology stocks. As caution about the Federal Reserve's interest rate hike in October decreased due to slowing employment growth, companies such as NVIDIA and Microsoft raised the index. Nasdaq broke its all-time high at the closing price.

On the 5th (local time), the Dow Jones Industrial Average closed at 51,267.90, up 90.94 points (0.18%) from the previous trading day. The Standard & Poor's (S&P) 500 Index closed at 7,773.95, up 51.23 points (0.66%), and the Nasdaq Composite Index closed at 27,477.31, up 286.45 points (1.05%). S&P 500 also narrowed the gap from its previous high to about 0.3%.

The reason for the rise was expectations about interest rates that changed after the employment indicator announced on the 2nd. As non-farm payrolls in the U.S. increased by 29,000 in September, falling short of market expectations, caution about an interest rate hike in October was lowered. Based on CME Fed Watch cited by Reuters, the probability of an interest rate increase in October reflected in the market on the 5th was about 24%, down from about 70% a week ago.

Meanwhile, large technology stocks led the rise. Nvidia rose 2.12%, Broadcom rose 2.08%, and Microsoft and Meta also rose 1.48% and 1.90%, respectively. Tesla rose 2.20% and Alphabet rose 0.86%. Apple and Amazon fell 0.24% and 0.05%, respectively, showing differences even among large technology stocks.

Nvidia and Broadcom's strength did not spread to the entire semiconductor industry. Intel fell 2.63%, Qualcomm fell 2.21%, Micron fell 1.02%, and AMD fell 0.34%. The Philadelphia Semiconductor Index closed at 13,172.74, up 0.27%, with a smaller increase than the Nasdaq. On the other hand, storage device companies Western Digital and Seagate rose 6.34% and 4.49%, respectively.

Outside of technology stocks, payment companies Visa and Mastercard rose 2.51% and 2.23%, respectively. Healthcare showed mixed results, with UnitedHealth and Abbott rising 1.80% and 2.67%, respectively, but Merck and Bristol-Myers Squibb falling 3.30% and 3.83%, respectively.

Even with the rise in stock prices, the burden of inflation remains. The Institute for Supply Management's (ISM) September service industry Purchasing Managers' Index (PMI) announced on this day was 54.9, lower than the previous month's 55.4, but above the 50 threshold that separates expansion from contraction. As the pace of expansion in the service industry slowed, the price index paid rose from 72.6 to 74.0, hitting the highest level since July 2022. The pressure to increase costs felt by companies has actually increased.

Long-term interest rates also rose. The 10-year U.S. Treasury bond interest rate rose to 5.31%, showing a different trend from the lowered expectations of an interest rate hike in October. On this day, the stock market continued its upward trend, led by large technology stocks, despite the interest rate burden.

Next week, the third quarter earnings announcement will begin in earnest along with the performance disclosure of large banks such as JP Morgan. The market's next concern is whether companies' performance and future prospects will support the rising stock price.