However, as the ISM service industry index showed good results, Apple and Nvidia

08/06 Nasdaq increases volatility, with fall shrinking after plunging on improvement of ISM service index

The U.S. stock market started sharply lower in the wake of the recent economic downturn and Apple (-4.82 percent) and Nvidia (-6.36 percent). In particular, the Nasdaq plunged 6.36 percent. However, as the ISM service industry index showed good results, Apple and Nvidia plunged 10 percent and 15 percent, respectively, and the Nasdaq shrank to 1.9 percent. Of course, the Dow and Russell 2000 indexes have limited rebound due to high concerns over the economy. In the second half of the market, Alphabet (-4.61%) restricted the number of large tech stocks to go on sale again (-2.60 percent, Nasdaq -3.43 percent, S&P 500 -3.00 percent, Russell 2000 -3.33 percent, Philadelphia Semiconductor Index -1.92%)

*Variables: Recession and Volatility

Recently, market participants have put up for sale in ISM Manufacturing Index and Employment Report, citing concerns about a recession. However, the so-called "Sham Rule" is misleading in that it is a supply-led (surge of immigrants) unemployment rate rise. In particular, Sham's law is only an empirical rule, and employment is solid, with the U.S. employment population still hitting an all-time high of 168.4 million. Meanwhile, the ISM service industry index was released at 51.4, an improvement from 48.8 announced last month, exceeding the 50.0 baseline. Details such as new orders (47.3 → 52.4) and employment index (46.1 → 51.1 → 51.1) are also positive. This alleviates concerns about a hard landing in the economy. The market is strong in the dollar, bond rates are rising, and the stock market is seeing an inflow of backlash buying

Taking this into account, a 125 basis point cut (55% probability) by the end of the year can be seen as an overreaction, with the September 50 basis point cut expected by market participants setting it at 83% probability by CME FedWatch. Of course, the quick cut is possible as the market expects, but the current data does not support this. This is because real consumption is slowing, but it is still solid and employment is also still in demand. As a result, the possibility of a hard landing is not yet high. Goolsbee also argues that employment data is weaker than expected but does not yet appear to be a recession.

Of course, the slowdown in consumption is slowing due to negative savings, and employment is solid, but it is burdensome that it is showing a decreasing trend. In addition, high prices and high interest rates are also burdensome, which are factors that are expanding consumption among the low-income class mentioned in the earnings announcements of major companies. According to the demand for loans announced on this day, it has weakened due to high interest rates, and the strengthening of loan requirements is likely to put a burden on the future. Considering this, the expansion of upward/downward volatility that has been continuing since last week is expected to continue

*Featured Stocks: Most Stocks, including Apple and Nvidia, Increase Volatility

Apple (-4.82%) once plunged nearly 11% on the news that Berkshire Hathaway sold 115 million shares in the first quarter and 380 million shares in the second quarter of its holdings. However, it does not believe that the possibility of continued selling is high, and the drop has been reduced due to the influx of backlash buying in the recent earnings report, given that sales continue to increase. Large technology stocks such as MS (-3.27%), Meta Platforms (-2.54%), and Amazon (-4.10%) also saw their fall shrink after falling sharply. Alphabet (-4.61%) extended its fall again after news that it lost the anti-trust ruling while reducing its fall. This puts a burden on large tech stocks that had anti-trust issues

Nvidia (-6.36%) started with a 15% plunge on reports that its next-generation chip, Blackwell, would delay it for at least three months due to design issues. However, it pared its fall after Goldman Sachs announced that it expects Blackwell's delay to boost demand for H100 in the short term and will have little impact on Nvidia's 2025 earnings and long-term competitiveness. AMD (+1.75%) rose, on the other hand, highlighting its competitive advantage. Intel (-6.34%), Micron (-2.46%), and TSMC (-1.27%) also fell, but the fall was reduced. Semiconductor components such as AMAT (+0.03%), RAM Research (+0.97%) and ASML (+1.36%) rebounded. The Philadelphia Semiconductor Index fell 1.92%

Tesla (-4.23%) fell due to concerns over a U.S. economic downturn. In the automobile industry, sales plunged more than 12% in the early part of the market due to a drop in sales during the economic downturn, but the fall was greatly reduced as concerns over a recession eased. Electric vehicle-related stocks such as Rivian (-0.75%), Lucid (-3.85%), Nio (-3.95%), and Xiaopeng (-3.17%), as well as Ford (-3.19%), GM (-2.96%) fell, but ended the decline. Financial stocks such as JPMorgan (-2.13%), BOA (-2.47%), and Citigroup (-3.42%) were also sluggish due to concerns over a recession, but ended the decline

Special real estate REITs companies such as telecommunications and data centers also fell, including American Tower (-3.60%), Digital Realty Trust (-4.22 percent), and Equinix (-4.76 percent). REITs financial companies such as Realty Income (-0.24 percent) and SPG (-2.00 percent), utilities such as Nextra Energy (-3.18 percent), Duke Energy (-2.55%), and economic defense businesses such as Coca-Cola (-1.77%) and P&G (-1.19 percent) are also sluggish. Overall, investor sentiment has shrunk and they have also been put up for sale. After the market closed, Palantir (-2.63%) reported better earnings and better expected sales

*S. Korean stock market-related figures

The MSCI Korea Stock Exchange ETF fell 8.17 percent, reflecting the 8.77 percent plunge in the previous day, but ended the day down 5.30 percent as the U.S. stock market fell. The MSSCI Emerging Index ETF fell by 5.31 percent, taking into account that the Chinese stock market fell by only 1 percent, before falling by 2.74 percent. The Philadelphia Semiconductor Index once plunged 6.89 percent and turned upward, before ending the day down 1.92 percent.

The Russell 2000 index fell 3.33% to return its recent cyclical gains, reflecting recessionary issues. The Dow fell 1.75%. The VIX index fell 14.47%p