NY Stock Market Absorbs Tapering; Commodities Plunge... Chinese Listed Stocks Crash

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Baek Jong-min] The New York stock market showed relatively stable performance, overcoming the Federal Reserve's (Fed) asset purchase tapering issue. However, the decline of Chinese companies listed on the U.S. stock market is deepening.

On the 19th (local time), the Dow Jones Industrial Average fell 66.57 points (0.19%) to close at 34,894.12, the S&P 500 index rose 5.53 points (0.13%) to 4,405.80, and the Nasdaq index increased 15.87 points (0.11%) to 14,541.79.

Although the Dow continued its weakness, the decline was limited compared to a 1% drop in pre-market trading. The S&P 500 and Nasdaq actually turned to an upward trend.

Wall Street expects the Fed to start tapering in November rather than September, as initially feared, based on the July FOMC minutes, and views this as more accommodative than expected.

Bank of America (BofA) predicted, "Due to Fed scheduling and operational considerations, the most likely start for tapering is November."

The U.S. 10-year Treasury yield fell by 0.03 percentage points from the previous day to 1.243%. Despite the tapering announcement, U.S. Treasury prices remained strong.

With bond yields falling, bank stocks could not avoid a decline of over 1%. The drop in market interest rates despite tapering announcements weighed on bank stocks.

Concerns over economic slowdown due to tapering and the spread of the Delta variant pushed the U.S. dollar higher again. The U.S. dollar index rose 0.47% to 93.582, the highest level since November last year.

The strong dollar caused prices of dollar-denominated commodities such as crude oil to plunge. West Texas Intermediate (WTI) crude oil closed down $1.77 (2.7%) at $63.69 per barrel. This marked the sixth consecutive trading day of decline and the lowest level since May.

Copper fell about 1.8%, and gold dropped around 0.1%. Bloomberg reported that commodities are experiencing their worst week in two months. The Bloomberg Commodity Index fell to its lowest level since June.

Bart Melek, Head of Commodity Strategy at TD Securities, explained, "Concerns that tapering will reduce liquidity and reflation trades are reflected in the commodity market's plunge."

The drop in oil prices caused petrochemical companies' stocks to fall. Oil majors such as ExxonMobil and Chevron declined by 2-3%.

Department store chain Macy's surged 20% on the back of better-than-expected second-quarter earnings.

Moderna's stock fell more than 5% intraday, and Pfizer also declined by over 1%.

Robinhood plunged 10% amid rising concerns about future earnings. Semiconductor company Nvidia rose 3% based on better-than-expected results.

A notable movement in the market was the plunge of Chinese companies. Alibaba fell 6%, Baidu 4%, Tencent Holdings 6%, and Didi Chuxing 9%. Alibaba's stock hit its lowest level in two years.

As Chinese authorities continue regulations on internet-related companies, the stocks of these companies have been plummeting day after day.

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