[US Market Report] November 14 | SOX -3.43%, Interest Rate 5.154% — Why Semiconductors Were Sold Despite PPI Being Below Expectations
The SOX fell significantly by -3.43%. Meanwhile, the US 10-year interest rate rose to 5.154%.
Good morning, this is Long-Term Investor @VOO.
The US market over the weekend saw selling spread, centered on semiconductor stocks.
The Producer Price Index (PPI) for October was lower than market expectations, but concerns about inflation have not receded.
Furthermore, uncertainty surrounding the change in NVIDIA’s top management continues.
Price indicators were weaker than expected. Even so, interest rates rose and AI stocks were sold.
Today, I will consider this market reaction.
📊 Market Sentiment & Key Indicators
(Stock prices, VIX, etc., as of the close on November 13, US time)
Fear & Greed Index: 39
→ A slight decline from 40 on the previous business day. It is still in the Fear zone, but not extreme fear.
Put-Call Ratio: 0.89 (CPC) / 0.856 (PCC)
→ Both are the latest confirmed values. A decline from the previous confirmed values of CPC 0.92 and PCC 0.895. However, since the respective target business days have not been confirmed, I will not directly link this to the stock price decline on the 13th.
US 10-Year Treasury Yield: 5.154%
→ Rose from 5.127%. Concerns about the persistence of inflation and additional interest rate hikes continue.
VIX Index: 19.29
→ Rose from 18.69. However, it is below 20, so the market as a whole is not in a panic.
Dollar Index (DXY): 103.4
→ Rose from 103.1. The dollar strengthened against the backdrop of expectations for monetary tightening.
Dollar-Yen: 159.8 yen
→ A slight yen appreciation from 159.9 yen. It continues to hover just before 160 yen.
What caught my attention this time were interest rates and the VIX.
The 10-year interest rate continues to rise in the 5% range, but the VIX is in the 19 range.
There is caution regarding high interest rates. Even so, the stock market as a whole is not engulfed in strong fear.
That is how it appears.
📈 Market Movements
The NY Dow is 52,347.55 (+50.46) +0.10%
The S&P 500 is 7,561.67 (-30.73) -0.41%
The NASDAQ 100 is 27,943.74 (-345.45) -1.22%
The Russell 2000 is 2,790.49 (-8.57) -0.31%
The Philadelphia Semiconductor Index is 10,146.32 (-360.35) -3.43%
Major indices were mixed.
While the NY Dow rose slightly, the NASDAQ 100 and SOX fell significantly.
Selling in semiconductor stocks was particularly notable.
NVIDIA fell for the sixth consecutive week, the longest streak since October 2012.
AMD and Broadcom also declined, and selling spread to AI cloud-related stocks such as CoreWeave and Nebius.
Meanwhile, the S&P 500 is up +2.51% for the week.
Although there was a correction in the latter half of the week, it rebounded when viewed on a weekly basis.
I believe it was a day where caution toward AI-related stocks intensified again, rather than the entire market collapsing. was the case.
📰 Notable News and Factors
🤖 ① NVIDIA’s Search for a Successor — Key Person Risk Remaining in the AI Market
Following the resignation of former NVIDIA CEO Huang, the search for a successor has begun.
The Financial Times reported that the company’s board of directors has contacted Arm CEO Rene Haas.
Mr. Haas has approximately seven years of experience working at NVIDIA in the past.
However, a successor has not been decided, and NVIDIA is also taking a cautious stance regarding the formal selection of candidates.
What concerns me is the impact that a change in top management will have on the company’s growth strategy.
Mr. Huang is the person who has led the expansion of the AI semiconductor market.
Precisely because his presence was so significant, his sudden resignation causes anxiety among investors.
No matter how much a company grows, relying too heavily on the person supporting that growth becomes a risk.
Moving forward, I would like to confirm not only the successor appointment but also whether customer relationships and investment plans will be maintained.
📊 ② PPI +6.5% Year-on-Year – Interest Rates Rise Even Though It Was Below Expectations
The October Producer Price Index (PPI) released on the 13th was,
+0.3% month-on-month (expected +0.4%)
+6.5% year-on-year (the highest growth since November 2022)
.
Month-on-month, it fell below market expectations and slowed significantly from +1.4% in September.
However, year-on-year, high price increases continue to persist.
This is the point of this report.
Normally, price indicators that fall below expectations lead to expectations of lower interest rates.
However, the 10-year interest rate rose to 5.154%.
The market is likely looking not only at the one-month slowdown but also at the fact that inflation remains at a high level.
Furthermore, this week’s CPI also exceeded expectations.
The weakening momentum of price increases and inflation settling down sufficiently are two different things.
The possibility that the Fed will continue additional interest rate hikes is still being considered.
📈 ③ S&P 500 to 8,700? – Looking at the Premises of Bullish Forecasts
Goldman Sachs has indicated a forecast that the S&P 500 will rise to 8,700 points over the next 12 months.
There is about 15% upside from the closing price on November 12.
The background includes a sense of undervaluation due to recent stock price declines and the resilience of the US economy.
However, I am more concerned about the premises than the forecast figures themselves.
The company expects corporate profit growth to slow down in the future.
One reason they still think stock prices will rise is the decline in inflation and bond yields.
However, currently, the 10-year interest rate is 5.154%.
Inflation also remains at a high level.
For bullish forecasts to materialize, not only corporate profits but also an improvement in the interest rate environment will be important.
Rather than targeting the number 8,700, I want to watch whether those prerequisites actually fall into place.
💱 Trends in Exchange Rates, Interest Rates, and Commodities
WTI Crude Oil Futures: $88.9 range
→ Almost the same level as the previous business day. Due to concerns over oversupply, it trended downward for the week.
Gold: $3,878 range
→ Almost flat from the previous business day’s $3,877 range.
Bitcoin: $68,464 range
→ A significant decline from the previous business day’s $71,580 range.
In the stock market, AI-related stocks were sold, and Bitcoin also fell.
On the other hand, the movements of crude oil and gold were relatively small.
💬 Impressions and Summary ~Perspective as a Long-term Investor~
What concerned me most today was that the 10-year interest rate rose to 5.154% even though the PPI was lower than market expectations.
And in that environment, the SOX was -3.43%.
Last week, AI stocks were sold even when interest rates fell.
There were days of significant rebound this week, but they were sold again at the end of the week.
I believe this movement cannot be explained by interest rates alone.
NVIDIA’s management concerns.
The outlook for AI capital expenditure.
And the possibility of high interest rates persisting.
I think the market is trying to evaluate multiple issues simultaneously.
What is interesting here is Goldman Sachs’ forecast of 8,700.
Even if corporate earnings growth slows, stock prices could rise if interest rates fall.
However, if interest rates remain high, that premise changes.
Rather than the stock price forecast itself, I want to see if the conditions supporting the forecast have changed.
Fear & Greed is at 39, and VIX is at 19.29.
There is caution in the market, but it is not extreme fear.
I will continue my accumulation into the S&P 500 and NASDAQ 100.
Regarding additional investments, I want to check interest rates and market sentiment rather than judging solely by the rate of stock price decline.
Instead of trying to predict future stock prices, I will keep watching the conditions that support that future.
That is what I felt once again from today’s market.
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