New York Stock Market Closes Lower After FOMC Minutes Release... "COVID-19 Risk Expands Economic Burden"

[Image source=AP Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] The New York stock market closed lower across all three major indices as the minutes from last month's Federal Open Market Committee (FOMC) meeting, released late in the session, influenced investor sentiment. Early in the session, tech stocks led a strong rally, with Apple’s market capitalization surpassing $2 trillion intraday for the first time ever. However, after the FOMC minutes revealed significant economic risks posed by the COVID-19 pandemic, concerns grew and the market reversed to a decline.

On the 19th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 27,692.88, down 85.19 points (0.31%) from the previous session. The S&P 500 fell 14.93 points (0.44%) to 3,374.85, and the tech-heavy Nasdaq Composite dropped 64.38 points (0.57%) to 11,146.46.

Earlier in the day, Apple’s market cap exceeded $2 trillion intraday for the first time among U.S.-listed companies, continuing the bullish trend from the previous day. Strong second-quarter earnings from major U.S. retailers such as Target and Lowe’s also boosted investor sentiment. Target’s Q2 net profit nearly doubled compared to the same period last year, driven by growth in its online business.

However, all three major indices reversed to losses after the Federal Reserve’s FOMC minutes from last month were released late in the session. The minutes showed that Fed officials expressed concerns that the ongoing COVID-19 crisis is placing a significant burden on the economy and poses considerable risks to the economic outlook.

While emphasizing economic uncertainty, the Fed expressed a negative view on additional stimulus measures such as yield curve control. Officials noted that the benefits of yield curve control are minimal under current conditions and warned of risks associated with excessive expansion of the Fed’s balance sheet. They argued that such measures should remain options to consider only if circumstances change dramatically. The indication that no immediate additional stimulus would be forthcoming contributed to the market decline.

Market experts also expressed disappointment with the FOMC minutes. According to CNBC, Nathan Sheet, chief economist at PGIM Fixed Income, said, "Yield curve control is now a stimulus tool that the Fed has decided to exclude, at least for the time being," adding, "The Fed is really good with a hammer and screwdriver, but they’re saying they don’t need a drill."

This content was produced with the assistance of AI translation services.