News 5

Major U.S. stock indexes closed higher on the New York market. Private-sector employment data fell far short of expectations, boosting hopes for a U.S. interest rate cut. However, a report that Microsoft (MS) lowered its artificial intelligence (AI) sales targets dented investor sentiment.

On the 3rd (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average rose 408.44 points (0.86%) from the previous day to 47,882.90, the Standard & Poor's (S&P) 500 index rose 20.35 points (0.30%) to 6,849.72, and the Nasdaq Composite rose 40.42 points (0.17%) to 23,454.09.

Weak U.S. private employment data stirred expectations of a rate cut by the U.S. central bank (Fed). According to the ADP national employment report, private payrolls in November decreased by 32,000 from the previous month. The market had expected an increase of 10,000, but it was a 'shock' with a much larger decline.

Especially, the small business sector plunged by as many as 120,000. This clearly showed a deterioration centered on small businesses and retail.

Earlier, the Fed had emphasized that it would focus on employment in its monetary policy.

As rate cut expectations grew, buying flowed into retail, financials, and industrial sectors.

The Russell 2000 index, focused on small-cap companies, also surged 1.91%.

However, investor sentiment toward tech stocks did not improve much. U.S. IT outlet The Information reported that MS lowered sales growth targets for some AI agent products and reduced sales quotas for salespeople. When the sales targets for those products were not met, this year's targets were reported to have been cut in half.

But MS denied The Information's report, saying, "We did not lower sales quotas or targets for our salespeople."

MS's rebuttal failed to revive investor sentiment for tech stocks. That day, Nvidia, Apple, and Amazon fell around 1%. MS fell 2.5%.

By sector, all sectors except utilities and technology rose.

Financials and energy jumped more than 1%.

Salesforce's adjusted third-quarter earnings per share (EPS) announced after the close topped expectations, and its stock rose more than 5% in after-hours trading.

The Philadelphia Semiconductor Index jumped 1.83%, extending its two-day rally.

The U.S. services sector improved in November from the previous month, continuing an expansion trend. The Institute for Supply Management (ISM) announced that the final November services Purchasing Managers Index (PMI) came in at 52.6. It rose 0.2 points from October's 52.4 and slightly beat the market expectation of 52.1.

According to the Chicago Mercantile Exchange (CME) FedWatch tool, federal funds futures priced in an 89.1% chance of a 25bp rate cut in December.

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) was 16.08, down 0.51 points (3.07%) from the previous close.