Semiconductor stocks collapse on concerns over MS investment cuts... Nasdaq down 1.21% [New York Stock Market Briefing]

Major indices on the New York stock market closed mixed with a downward trend. The tech-heavy Nasdaq Composite fell more than 1%, while the Dow Jones Industrial Average, which managed to rise, barely showed a slight gain. The main impact came from doubts about whether Microsoft (MS) could continue its large-scale investments in artificial intelligence (AI).

On the 24th (local time), at the New York Stock Exchange (NYSE), the Dow index closed at 43,461.21, up 33.19 points (0.08%) from the previous day, while the S&P 500 index fell 29.88 points (0.50%) to 5,983.25, and the Nasdaq index dropped 237.08 points (1.21%) to 19,286.92.

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While all three major indices rose initially due to bargain hunting following last week's decline, AI-related stocks soon dragged down the Nasdaq index. This came after news that MS had terminated lease agreements for hundreds of megawatts with at least two private data center operators.

Concerns resurfaced about whether Big Tech companies could continue massive AI investments with unclear profit timelines. As a result, Nvidia fell 3.09%. Semiconductor design company Broadcom's stock price dropped 4.91%, while Taiwan Semiconductor Manufacturing Company (TSMC) fell 3.32%, AMD 2.46%, Intel 2.41%, and Qualcomm 2.62%. The Philadelphia Semiconductor Index declined 2.59%.

Power supplier Vistra's stock price plunged 5.11%, GE Vernova 3.65%, and Constellation Energy 5.88%.

MS, which triggered the semiconductor and power sector decline, only fell 1.03%.

Apple announced "a total investment of $500 billion in the United States over the next 4 years" and its stock rose 0.63%.

Warren Buffett's Berkshire Hathaway rose 4.11% following strong earnings results. Operating profit for the fourth quarter of last year surged 71% year-over-year to $14.53 billion.

Emerging electric vehicle manufacturer Rivian's stock slid 7.79% after Bank of America downgraded its investment rating from 'neutral' to 'underperform' and lowered its target price from $13 to $10.

By sector, among the 11 sectors comprising the S&P 500, five sectors - Consumer Staples (0.1%), Energy (0.11%), Financials (0.45%), Healthcare (0.75%), and Real Estate (0.35%) - rose, while six sectors - Consumer Discretionary (0.87%), Industrials (0.44%), Materials (0.18%), Technology (1.43%), Communication Services (0.63%), and Utilities (0.51%) - fell.

Near the end of trading, major indices were further pressured by Donald Trump's statement that "when the 'one-month tariff suspension on Canada and Mexico's 25% tariff' expires next week, tariffs will be imposed as scheduled."

According to CME Group's FedWatch tool, as of market close, the probability of the Fed cutting interest rates by 25bp (1bp=0.01%) or more in the first half of this year was reflected at 62.9%, while the possibility of maintaining rates was 37.1%.

The probability of maintaining rates through year-end was 8.5%, while the likelihood of a 25bp or greater cut was 91.5%, and the possibility of a 50bp or greater cut was 64.9%.

While Fed officials maintain a hawkish stance by showing caution toward rate cuts, this suggests investors expect one rate cut in the first half and two cuts within the year.

Meanwhile, the Volatility Index (VIX) compiled by the Chicago Board Options Exchange (CBOE) showed 18.98, up 0.77 points (4.23%) from the previous session.

Case Han, Hankyung.com Reporter case@hankyung.com