[Wall Street Close | October 1] Slight increase in government bond interest rates... Semiconductor and energy stocks are strong

Micron rose 3.03%, Philadelphia Semiconductor Index rose 1.59%

1st place in energy industry growth rate... A look at the September employment report

The New York stock market ended the first trading day of the fourth quarter with a slight increase. Stock prices, which had been pushed back by the rise in government bond interest rates, rebounded as interest rates fell from their peak. Semiconductor stocks and energy stocks showed strength, but the gains of major indices were limited as some large technology stocks such as Apple and Alphabet fell.

On the 1st (local time), the Dow Jones Industrial Average closed at 50,926.56, up 20.51 points (0.04%) from the previous day. The Standard & Poor's (S&P) 500 Index closed at 7,666.45, up 14.91 points (0.19%), and the Nasdaq Composite Index closed at 26,871.60, up 10.53 points (0.04%). The S&P 500 index stopped falling for three consecutive trading days.

The variable that changed the direction of the market that day was the government bond interest rate. The U.S. 10-year Treasury bond interest rate once rose to around 5.34%, the highest level since 2002, but by the time the New York Stock Exchange closed, it fell to the 5.23% range and stopped rising for 7 consecutive trading days. The 2-year bond interest rate also fell 0.10 percentage points from the previous period, recording around 4.79%. The pressure to raise interest rates eased as the U.S. Treasury's repurchase (buyback) of long-term Treasury bonds worth $6 billion and the inflow of demand for safe assets supported Treasury prices.

Comments by Federal Reserve Vice Chairman Philip Jefferson also eased caution about further interest rate hikes. Vice Chairman Jefferson said in his speech that day that he supported the September interest rate increase, but that future policy adjustments must be made by looking at economic indicators, forecasts, and risk factors, and that more time may be needed to make a decision. While being wary of the risk of rising prices, he indicated that he would not rush the next steps.

With the interest rate burden easing, semiconductor stocks showed a higher rate of increase than major indices. The Philadelphia Semiconductor Index closed at 12,829.00, up 200.38 points (1.59%).  Micron rose 3.03%, and Nvidia and AMD also rose 1.09% and 0.65%, respectively.

Micron announced in its earnings announcement the previous day that sales in the fourth quarter of the fiscal year were at a record high thanks to increased demand for artificial intelligence (AI). Expectations for increased sales in the next quarter also supported expectations for memory demand. The stock price closed higher after going through a downward period during the day.

Semiconductor equipment stocks also rose. Lam Research rose 3.53%, Applied Materials rose 3.50%, and KLA rose 2.77%. On the other hand, Broadcom fell 2.15% and Intel fell 0.19%, showing differences among stocks even within the semiconductor industry.

Accenture, an information technology (IT) service company that announced its performance, also surged 15.78%. Fiscal fourth-quarter sales exceeded the upper end of the company's forecast range.  Among software stocks, Salesforce rose 3.10% and ServiceNow rose 2.80%.

This strength did not spread across large technology stocks. Apple fell 0.81%, Alphabet Class A fell 1.70%, and Amazon fell 0.37%. Tesla and Microsoft also fell 0.20% and 0.02%, respectively, and Meta rose only 0.10%.

Outside of technology stocks, the energy sector stood out. As supply concerns grew due to China's suspension of fuel exports, the price of Brent crude oil rose by more than $4 per barrel. The S&P 500 energy sector rose 1.9%, recording the highest increase among 11 major industries.

The market's next interest is the US September employment report, which will be released on the 2nd Korean time. Economists compiled by the Wall Street Journal (WSJ) expected non-farm employment growth to slow to 84,000 from 162,000 the previous month. Actual employment and wage indicators serve as data to gauge the need for additional interest rate increases by the Federal Reserve.