Growth rate halves as inflation stays elevated…all three major indexes fall [New York stock market briefing]

All three major U.S. equity indexes in New York closed lower. With the closure of the Strait of Hormuz dragging on, a slowdown in U.S. economic growth and worsening inflation indicators weighed on investor sentiment.

On the 13th (U.S. Eastern Time), at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average fell 0.26% from the previous session to close at 46,558.47. The S&P 500 slid 0.61% to 6,632.19, and the Nasdaq Composite dropped 0.93% to finish at 22,105.36.

By sector, materials and technology fell more than 1%. Mega-cap tech companies with market capitalizations above $1 trillion all declined, with Broadcom and Meta down around 4%. Adobe plunged more than 7% as disappointing fourth-quarter results combined with an uncertain outlook. By contrast, the Philadelphia Semiconductor Index edged higher. Micron Technology rose more than 5%, while TSMC and Intel also gained.

The Strait of Hormuz remains closed. Aside from Iran allowing two Indian-flagged LPG carriers to pass, there is virtually no cargo flow. European countries including France and Italy have entered talks with Iran to secure passage for their vessels, but Iran’s willingness to negotiate is unclear. The U.S. military has continued strikes on Iran and is reportedly considering deploying additional warships, including Marine Corps assets. As concerns over a prolonged war grew, global benchmark Brent crude for May delivery rose more than 3% to settle above $103, the highest level since late July 2022.

Key economic data also dampened risk appetite. According to the U.S. Department of Commerce, the revised estimate for real GDP growth in the fourth quarter of last year came in at an annualized 0.7% quarter-on-quarter. That is about half the advance estimate (1.4%) and a sharp slowdown versus the third quarter (4.4%). The January core Personal Consumption Expenditures (PCE) price index, an inflation gauge, rose 0.4% month-on-month, matching the same pace for a second consecutive month. As the reading predates the outbreak of the Iran war, anxiety over upcoming data has intensified.

David Aspell, CIO of global macro at Mount Lucas Management, said, “Oil price volatility and the rate path embedded in equity valuations are now prompting doubts,” adding, “Corporate earnings are quite good, but investor sentiment is not.” According to the CME FedWatch Tool, federal funds futures are pricing in a 77.1% probability that the policy rate will be left unchanged through June.

Hong Min-seong, Hankyung.com reporter mshong@hankyung.com