'Did It Drop Too Much?' Dow Jones Rebound Rally... US Treasury Yield Hits 1.3% Intraday

[Image source=AP Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] The major indices of the New York stock market all rebounded simultaneously. This was due to a recovery in risk asset investment sentiment as concerns over interest rate hikes eased. The rise in value stocks, which had underperformed growth stocks last week, was particularly notable.

On the 21st (local time), the Dow Jones Industrial Average rose 586.89 points (1.76%) to close at 33,876.97, the S&P 500 index increased by 58.34 points (1.40%) to 4,224.79, and the Nasdaq index rose 111.10 points (0.79%) to finish at 14,141.48.

The decline in major indices earlier was interpreted as an overreaction triggered by the Federal Reserve's announcement last week that it would raise the benchmark interest rate in 2023.

The Dow's rise was prominent as U.S. Treasury yields showed a 'flattening' phenomenon, with short-term yields rising and long-term yields falling. The Dow's gain on this day was the largest since March.

The fear index (VIX), which surged 16% in the last trading session of last week, fell by 13% on this day, reflecting market stabilization.

Among the Dow components, credit card company American Express surged 4%. Aircraft manufacturer Boeing also rose by 3%. Supported by rising oil prices, petrochemical companies such as Chevron saw their stock prices strengthen. The energy sector rose about 4%.

Financial stocks like JPMorgan and Goldman Sachs, which had been weak due to falling Treasury yields, also showed a recovery of around 1-2%.

On this day, the 10-year Treasury yield fell to as low as 1.35% during the session, marking the lowest level in three months, but later rebounded to nearly 1.5%. An increase in Treasury yields means a decline in bond prices.

Most major tech stocks, including Apple and Facebook, also rose, but Amazon, which started its Prime Day sale event, fell by 0.94%.

Food delivery company DoorDash rose more than 3% after announcing grocery delivery services.

Two regional Federal Reserve Bank presidents attracted attention with their remarks on this day.

James Bullard, President of the St. Louis Fed, who shocked the market last Friday by advocating for interest rate hikes in 2022, said on this day that preparations should be made for tapering, the gradual reduction of asset purchase programs.

John Williams, President of the New York Fed, said, "The indicators and conditions are not yet sufficiently improved for the Fed to shift away from strong monetary policy support for the economy."

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