[New York Stock Market] Easing Uncertainty on Tightening and Russia Default... Relief Rally, Nasdaq Up 1.33%

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Major indices on the U.S. New York stock market closed higher on the 17th (local time), continuing a three-day winning streak. This was due to the reduced uncertainty over the monetary tightening path following the Federal Open Market Committee (FOMC) regular meeting held the previous day, as well as assessments that some stocks are nearing their bottom.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 34,480.76, up 417.66 points (1.23%) from the previous session. The S&P 500, which focuses on large-cap stocks, rose 53.81 points (1.23%) to 4,411.67, and the tech-heavy Nasdaq index closed at 13,614.78, up 178.23 points (1.33%).

Both the S&P 500 and Nasdaq showed gains for three consecutive trading days. The Russell 2000, which centers on small-cap stocks, also rose 34.30 points (1.69%) to 2,065.02. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street’s “fear gauge,” fell more than 3% to the mid-25 range compared to the previous session.

By sector, energy stocks led the market rally as international crude oil prices reclaimed the $100 per barrel level. Devon Energy and Diamondback rose 7% and 6%, respectively. The S&P 500 energy sector gained more than 3%. Healthcare and software stocks also showed strong performance.

Investors digested the FOMC regular meeting decisions while closely monitoring the potential impact of the future pace of tightening on the economy, as well as focusing on recent news surrounding the Ukraine situation.

The Federal Reserve (Fed) raised the benchmark interest rate by 0.25 percentage points for the first time since December 2018 and indicated through its dot plot that it may raise rates at all six remaining meetings this year. Regarding quantitative tightening (QT), including balance sheet reduction, the Fed specified that it could begin as early as May.

CNBC reported that the Fed’s decision “accelerated the stock market’s relief rally.” Adrian Zuckerman of UBS evaluated that the Fed’s attempt at a soft landing “had a considerably positive effect on stocks.” In the bond market, the yield on the U.S. 10-year Treasury note rose slightly to 2.192%, marking a four-day consecutive increase.

Regarding the Ukraine situation, despite the Russian Kremlin dismissing reports of significant progress in peace talks between the two countries, stock prices continued their upward trend. Both sides are continuing peace negotiations. Concerns about default eased somewhat following reports that Russia began making payments on foreign debt interest.

Meanwhile, President Joe Biden is scheduled to have a phone call with Chinese President Xi Jinping on the 18th. This is notable as the first direct communication between the U.S. and Chinese leaders amid heightened tensions due to Russia’s invasion of Ukraine.

Marco Kolanovic, Chief Global Market Strategist at JP Morgan, recommended increasing exposure to risk assets in an investor memo, stating, “A major market rally is underway.” He noted that geopolitical risks related to the Ukraine situation are expected to ease within weeks and that the correction phase is effectively coming to an end.

The U.S. economic indicators released on this day were generally positive. Weekly initial jobless claims decreased by 15,000 to 214,000, below expert expectations.

February housing starts increased by 6.8% month-over-month to an annualized 1,769,000 units (seasonally adjusted), marking the largest increase since 2006. Industrial production in February rose 0.5% month-over-month on a seasonally adjusted basis, meeting market expectations.

International crude oil prices surpassed the $100 per barrel mark again. On the New York Mercantile Exchange (NYMEX), April delivery West Texas Intermediate (WTI) crude oil closed at $102.98 per barrel, up 8.4% ($7.94) from the previous day. This was the first time in three trading days that WTI closed above $100 per barrel.

International gold prices rebounded after five trading days. On the New York Commodity Exchange, April delivery gold closed at $1,943.20 per ounce, up 1.8% ($34).

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