New York Stock Market Weakness... Impact of Rising US Treasury Yields and Strong Dollar

Investors Overreact to Musk's Comment
438% Stock Surge Incident Also Occurred

[Asia Economy New York=Correspondent Baek Jong-min] The New York stock market closed lower, focusing on rising Treasury yields and a stronger dollar.

[Image source=EPA Yonhap News]

On the 11th (local time), the Dow Jones Industrial Average fell 89.28 points (0.29%) to 31,008.69, the S&P 500 dropped 25.07 points (0.66%) to 3,799.61, and the Nasdaq fell 165.54 points (1.25%) to close at 13,036.43.

Last week, the New York stock market closed at an all-time high, anticipating a 'Blue Wave' effect from the Democrats gaining the Senate majority, but on this day, a wait-and-see stance spread, showing weakness.

The most notable factors were the rise in U.S. Treasury yields and the strengthening of the dollar.

On this day, the U.S. 10-year Treasury yield rose to 1.15%. Market analysis suggests it could rise as high as 1.2%. Rising yields are a negative factor for the stock market.

Raphael Bostic, President of the Federal Reserve Bank of Atlanta, said he is open to exit strategy ideas this year. He also mentioned the possibility of rate hikes as early as the second half of next year if the economic recovery is rapid.

The dollar, which had fallen due to concerns over the Biden administration's launch and large-scale fiscal spending, is instead showing strength. The dollar index, which measures the dollar's value against major currencies, recorded 90.528 on this day. After hitting 89.4 on the 5th, there were concerns about further declines, but it reversed to an upward trend within a week.

The rise in the dollar's value is interpreted as a phenomenon resulting from the increase in U.S. Treasury yields. On this day, as Treasury yields rose, the dollar index showed strength. Expectations that the Biden administration's stimulus measures will accelerate economic recovery also contributed to the dollar's strength.

Parash Upadhyaya, currency investment strategist at Amunji Pioneer Asset Management, explained, "The rise in U.S. Treasury yields and political uncertainty in the U.S. will continue to drive up the dollar's value."

Social media-related companies such as Twitter and Facebook plunged due to regulatory concerns. Twitter's stock price fell 6.4%, and Facebook's stock also dropped 4%. Apple's stock declined by 2.3%.

Tesla's stock, which had been on a strong rally for days, fell 7.8%, while Chinese electric vehicle maker Nio showed a contrasting trend, rising 6.8%.

Bank stocks such as JPMorgan Chase and Goldman Sachs, expected to benefit from rising bond yields, showed strength.

There was also an example showing market overheating. Tesla CEO Elon Musk's recommendation to use the messaging app 'Signal' to support a nonprofit organization triggered this. Investors, misunderstanding Musk's comment, focused on buying shares of a company named Signal. This stock, traded over-the-counter, surged 438% on the day.

February delivery West Texas Intermediate (WTI) crude oil closed at $52.25 per barrel, up 0.02% ($0.01) from the previous trading day. February delivery gold closed at $1,850.80 per ounce, up 0.8% ($15.40).

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