FOMC Relief and Falling US Treasury Yields... Bank Stocks Plunge, Tech Stocks Rise (Comprehensive)

FOMC Minutes Show No Early Tapering Mention
S&P 500 and Nasdaq Hit Record Highs Again

[Asia Economy New York=Correspondent Baek Jong-min] Major indices on the New York Stock Exchange closed higher after confirming that the Federal Reserve (Fed) has no intention of early tightening. The S&P 500 and Nasdaq indices continued their record-breaking streak.

[Image source=Yonhap News]

On the 7th (local time), the Dow Jones Industrial Average rose 104.42 points (0.30%) to close at 34,681.79, the S&P 500 increased by 14.59 points (0.34%) to 4,358.13, and the Nasdaq rose 1.42 points (0.01%) to 14,665.06.

The market paid attention to the minutes of the June Federal Open Market Committee (FOMC) meeting released that afternoon, but there were no remarks that dampened investor sentiment.

According to the minutes, the majority of members judged that it was not yet time to reduce asset purchases of $120 billion per month. However, the minutes stated that "some various participants expected that the conditions to begin slowing the pace of asset purchases would be met earlier than anticipated at the previous meeting."

The minutes also explained that the members "agreed that at the upcoming meeting, participants would assess economic progress toward the Committee's goals and begin discussing plans to adjust the path and composition of asset purchases."

CNBC reported that there was no hint regarding the timing of tapering. Rather, a market insider said, "Following these minutes, tapering is taken as a given, but attention is rather focused on interest rate hikes."

On the same day, the yield on the U.S. 10-year Treasury note fell again, reflecting anxiety about the long-term economic outlook.

The 10-year Treasury yield dropped to as low as 1.26% during the session, breaking below 1.3%. CNBC reported that this was the lowest Treasury yield since February. A decline in Treasury yields means a rise in bond prices.

John Luke Thayne, portfolio manager at Aptus Capital Advisory, explained, "Many expected Treasury weakness and sold off, but then had to buy bonds back after losses," diagnosing that the decline in Treasury yields is a structural situation that is bound to continue.

The drop in Treasury yields caused weakness in bank stocks such as Goldman Sachs and Bank of America. In contrast, tech stocks showed strong gains. Apple rose 1.8%, setting a record closing price. It is analyzed that JP Morgan’s raising of Apple’s target price from $165 to $170 led the price increase. Amazon also rose 0.5%, hitting a new high.

Twitter and Facebook closed lower following news of former President Donald Trump's lawsuit filing.

Didi Chuxing, which plunged 19% the previous day due to regulatory pressure from Chinese authorities, fell an additional 5% on the day.

Most energy-related stocks showed weakness due to the decline in oil prices.

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