'Another Fed Effect' New York Stock Market Closes Higher Supported by Volcker Rule Easing (Comprehensive)

Federal Reserve Building [Image source=AP News]

[Asia Economy New York=Correspondent Baek Jong-min] The US bank capital investment regulation easing measures have diluted concerns about the resurgence of the novel coronavirus infection (COVID-19) that had been spreading through the New York Stock Exchange. The stock market, which had been falling due to COVID-19, has once again benefited from the Federal Reserve (Fed) effect.

On the 25th (local time), the Dow Jones Industrial Average rose 299.66 points (1.18%) to close at 25,745.60, the S&P 500 index increased by 33.43 points (1.1%) to 3,083.76, and the Nasdaq closed up 107.84 points (1.09%) at 10,017.00.

On that day, the major indices started lower due to concerns about the spread of COVID-19 but turned upward after the announcement of the easing of the 'Volcker Rule,' which limits banks' capital investments. Bank stocks surged, leading the index gains.

With the recent easing of the Volcker Rule announced by the Federal Reserve (Fed) and others, banks can now make large-scale investments in risky assets such as venture capital.

The Fed's major bank stress test results, announced after the market close, stated that there are no problems with bank soundness even amid the COVID-19 situation. However, it warned that if the economic situation worsens, banks could face difficulties similar to those during the 2008 global financial crisis.

Texas, where COVID-19 cases surged, announced a halt to further economic reopening. Johns Hopkins University reported that the number of COVID-19 infections in the US reached 2.41 million.

Last week's unemployment insurance claims decreased by 60,000 from the previous week to 1.48 million, which was higher than expected but continued the downward trend. The number of people claiming unemployment insurance for more than a week consecutively dropped below 20 million, which was positive. The Wall Street Journal described the unemployment claims as having fallen from historic levels.

The Commerce Department announced that durable goods orders in May surged 15.8% compared to the previous month, marking the largest increase since July 2014. The US first-quarter gross domestic product (GDP) growth rate was finalized at a 5.0% decrease, consistent with the previous preliminary figure.

West Texas Intermediate (WTI) crude oil closed up 1.9% ($0.71) at $38.72 per barrel. Gold closed down 0.3% ($4.50) at $1,770.60 per ounce.

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