[New York Stock Market] Decline Amid Inflation Concerns... Nasdaq Down 1.56%, Led by Tech Stocks

[Asia Economy New York=Special Correspondent Joselgina] Amid Russia's ongoing invasion of Ukraine, on the 3rd (local time), major indices on the U.S. New York stock market showed a downward trend as investors closely watched how the recent sharp rise in oil prices might affect domestic inflation and the Federal Reserve's (Fed) monetary policy. Oil prices and Treasury yields, which surged the previous day, reversed course and declined, with the downturn particularly pronounced among technology stocks.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 33,794.66, down 96.69 points (0.29%) from the previous session. The large-cap S&P 500 index fell 23.05 points (0.53%) to 4,363.49, and the tech-heavy Nasdaq index dropped 214.07 points (1.56%) to 13,537.94. The small-cap Russell 2000 index also closed lower at 2,032.41, down 26.46 points (1.29%).

Among individual stocks, weakness in technology shares was notable. Tesla closed down 4.75% from the previous session. Nvidia fell 2.27%. Apple (-0.44%), Microsoft (-1.73%), Meta Platforms (-3.03%), and Amazon.com (-3.04%) all declined together.

Snowflake showed weakness after its earnings announcement, plunging more than 17% from the previous close. Okta also slipped about 8%.

Investors focused on the Ukraine situation, remarks by Federal Reserve Chair Jerome Powell over two consecutive days, and movements in oil prices and Treasury yields.

At a Senate Banking Committee hearing, Chair Powell reaffirmed plans for a rate hike in March. Regarding Russia's invasion of Ukraine, he said, "The ultimate consequences of the war are uncertain," but added, "At least in the short term, inflation could permeate the U.S. economy at a higher level."

Accordingly, following the 7.5% year-over-year surge in the January Consumer Price Index (CPI), there are expectations that the February CPI, scheduled for release next week, could rise further due to the impact of the Ukraine crisis. If inflation remains persistently high, the Fed's tightening pace will inevitably face more pressure. Bill Gross, co-founder of PIMCO, the world's largest bond fund, warned on CNBC that the U.S. economy currently faces the possibility of stagflation (economic slowdown amid high inflation).

The final reading of the February Services Purchasing Managers' Index (PMI) released by IHS Markit was 56.5 on a seasonally adjusted basis, a significant improvement from January's 51.2. Weekly initial jobless claims in the U.S. hit their lowest level this year. According to the U.S. Department of Labor, initial jobless claims for the week of February 20-26 totaled 215,000, down 18,000 from the previous week, below market expectations.

Market experts expect that despite geopolitical risks, the solid fundamentals of the U.S. economy will lead to stock price gains once the situation resolves. Scott Len, Senior Global Market Strategist at Wells Fargo Investment, said, "The situation on the ground in Ukraine is very fluid," adding, "While we don't know where the market's ultimate bottom is, the U.S. economy will continue to grow above average this year."

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's "fear gauge," fell below the 30 level compared to the previous session. The U.S. 10-year Treasury yield dropped to the 1.85% range. Citi strategist Robert Buckland noted, "Losses are concentrated in stocks directly exposed to Russia," and emphasized that attention should be paid more to the pace of future rate hikes and the Fed's actions than to the Ukraine crisis.

In the early days of the invasion last month, Russian forces refrained from indiscriminate airstrikes targeting civilians, but recently they have been bombing civilians and civilian facilities within Ukraine. Major foreign media reported that Mariupol, a strategic stronghold on the Sea of Azov in Ukraine, has been surrounded by Russian forces.

Russian and Ukrainian delegations held their second round of talks on this day but only agreed to provide humanitarian corridors for civilians and a temporary ceasefire limited to the evacuation of civilians in the affected areas. Russian Foreign Minister Sergey Lavrov confirmed that regardless of ceasefire negotiations, Russian military operations to neutralize Ukrainian military facilities will continue.

In the afternoon, the U.S. Biden administration announced additional economic sanctions targeting oligarchs close to President Putin and their families. This move aims to cut off Putin's financial resources by tightening the noose around 'Putin's backers,' including Russian billionaire Alisher Usmanov. Their assets in the U.S. will be frozen and blocked from the financial system, and their use of property will be prohibited. The UK also announced sanctions targeting Russian figures such as Usmanov and former Deputy Prime Minister Igor Shuvalov, including asset freezes, entry bans, and prohibitions on transactions with domestic companies.

International oil prices, which had surged due to Russia's invasion of Ukraine, eased on hopes for the restoration of the Iran nuclear deal. On the New York Mercantile Exchange (NYMEX), April delivery West Texas Intermediate (WTI) crude oil closed at $107.67 per barrel, down 2.6% from the previous day.

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