The week saw US equity indexes closing with mixed results as various geopolitical concerns particularly impacted major technology firms, notably semiconductor manufacturers. These concerns bolstered speculations regarding a potential interest-rate cut in September, thereby drawing investors' attentions toward sectors grounded in value. As of Friday, the Dow Jones Industrial Average settled at 40,287.53, reflecting an increase from 40,000.90 just a week prior, while the Nasdaq Composite recorded a dip, closing at 17,726.94 compared to 18,398.44 the previous week.
The S&P 500 also registered a decline, ending at 5,505.0 versus 5,615.35 the week before. Wednesday marked a significant downturn for the Nasdaq, experiencing its worst performance since 2022, plunging 2.8% amidst a dramatic sell-off in semiconductor stocks. Reports surfaced indicating that the US government may implement stricter export regulations, further pressuring semiconductor stocks. One particular company, ASML ($ASML), is reportedly at the forefront of potential US trade restrictions should it continue to provide China with advanced semiconductor technology.
Closing down 17% on Friday, ASML was the hardest hit among 13 technology firms boasting a market capitalization exceeding $200 billion. Moreover, Taiwan Semiconductor Manufacturing ($TSM) saw its shares tumble 11% throughout the week. This decline followed comments made by former US President Donald Trump in an interview with Bloomberg Businessweek, suggesting that Taiwan should compensate the US for its defense, stating "it doesn't give us anything." Overall, of the 13 tech giants monitored, only Accenture ($ACN) concluded the week with slight gains, while the rest fell short, making the technology sector the poorest performer for both the week and the month.
Contrastingly, sectors such as financials and real estate shone through as the spotlight shifted to earnings, and both stand to benefit as the Federal Reserve is anticipated to ease monetary policy in the near term. Further adding to the market dynamics, the probability of an interest-rate cut in September surged to 94% by Friday afternoon, a marked increase from 62% a month earlier, according to data derived from the CME Group's FedWatch Tool, indicating significant shifts in investor sentiment and market forecasts..