NY Stock Market Closes Higher Despite Persistent Inflation and November Tapering Indications

by Paek Jongmin

Published 14 Oct.2021 06:26(KST)

[Asia Economy New York=Correspondent Baek Jong-min] Major indices on the New York stock market closed higher despite inflationary pressures and the possibility of tapering asset purchases in November.

[Image source=Yonhap News]

On the 13th (local time), the Dow Jones Industrial Average fell 0.53 points (0.00%) to close at 34,377.81, the S&P 500 index rose 13.15 points (0.30%) to 4,363.80, and the Nasdaq index increased 105.71 points (0.73%) to close at 14,571.64.

The Consumer Price Index (CPI) for September, released by the Department of Labor that day, showed a larger increase than market expectations. The CPI rose 0.4% from the previous month and 5.4% compared to the same period last year.

The core CPI for September, excluding food and energy, increased 0.2% from the previous month and rose 4.0% year-over-year. The core CPI was in line with market expectations.

The minutes of the September Federal Open Market Committee (FOMC) meeting, released that afternoon, indicated that Federal Reserve (Fed) officials mentioned the possibility of starting tapering as early as mid-November.

Despite expectations of tapering amid inflationary pressures, the 10-year U.S. Treasury yield declined that day. The 10-year yield rose to 1.6% after the CPI release but then fell to 1.542%.

Meanwhile, the short-term 2-year Treasury yield rose to 0.368%, marking the highest level since late March 2020.

The Wall Street Journal interpreted the narrowing gap between short- and long-term Treasury yields as reflecting investors' perception that the Fed will raise interest rates faster than expected and that long-term growth prospects are weakening.

With bond yields falling, tech stocks gained upward momentum. Apple, the leading stock, closed down 0.4% due to reports that iPhone 13 production would be cut by 10 million units because of semiconductor shortages.

Electric vehicle maker Tesla rose 0.6%, maintaining its position above the $800 level for two consecutive days. Chinese electric vehicle company Nio's stock also rose by 2%.

Delta Air Lines fell 5% despite strong earnings, citing expected negative impacts on profits due to rising oil prices. Other airline stocks also plunged collectively.