[New York Stock Market] Has the Bottom Been Reached? Rising Amid Tightening Remarks... Nasdaq Up 1.95%

[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 22nd (local time). Despite Jerome Powell, Chairman of the Federal Reserve (Fed), having made tightening remarks the previous day that raised recession concerns, the market rebounded by digesting them with confidence in the U.S. economic fundamentals.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 34,807.46, up 254.47 points (0.74%) from the previous session. The large-cap S&P 500 index rose 50.43 points (1.13%) to 4,511.61, and the tech-heavy Nasdaq index gained 270.36 points (1.95%) to close at 14,108.82. The small-cap Russell 2000 index recorded 2,088.34, up 22.41 points (1.08%).

By stock, financial shares such as JP Morgan Chase (2.13%) and Bank of America (BoA, 3.13%) showed strength on expectations that profits would improve with future interest rate hikes.

Technology stocks, which had fallen sharply immediately after Powell’s tightening remarks the previous day, also rebounded. Alphabet (Google), Meta, and Amazon all jumped more than 2%. Tesla rose 7.91% from the previous session, nearing the $1,000 mark, as its European production base, the Gigafactory on the outskirts of Berlin, Germany, began full operation.

Nike’s stock price rose 2.23% after reporting quarterly earnings that exceeded expectations. Alibaba, listed in New York, also surged more than 11% on news that it would expand its share buyback program to $25 billion. Procter & Gamble (P&G) showed nearly a 1% increase after investment firm Truist upgraded its investment rating to 'buy.'

On the other hand, energy stocks such as Diamondback Energy (-1.81%) and Occidental Petroleum (-2.17%) showed weakness.

Investors closely monitored market participants’ interest rate hike expectations following Powell’s remarks the previous day, as well as the situation in Ukraine.

Wayne Wilbanks, co-founder of Wilbanks Smith & Thomas Asset Management, said, "We can see that the counterattack of growth stocks has begun," adding, "Because stock prices fell sharply, valuations have become much higher than concerns about interest rates." Hugh Roberts of Quant Insight also said regarding the Fed’s tightening message, "It is a message that the U.S. economy is resilient enough to withstand this (monetary tightening)."

Goldman Sachs reflected Powell’s remarks by forecasting that the Fed will raise interest rates by 0.50 percentage points each at the May and June meetings. This is a shift from the previously expected baby step (0.25 percentage point increase) to a big step. Jonathan Pingel, chief economist at UBS, also diagnosed in a report that "the likelihood of a 0.50 percentage point increase is growing."

In the bond market on this day, the yield on the U.S. 10-year Treasury note rose further from the previous day to the 2.38% range, marking the highest level since 2019. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street’s 'fear index,' fell more than 2% from the previous session to the 22 level.

The situation in Ukraine is worsening day by day as Russia’s invasion approaches nearly a month. In Dnipro, a city in eastern Ukraine, a rocket attack destroyed a railway station and killed one person on this day. Ukrainian President Volodymyr Zelensky requested additional sanctions from Western countries against Russia during a speech to the Italian parliament.

Regarding this, Jake Sullivan, White House National Security Advisor, stated that U.S. President Joe Biden will announce additional sanctions against Russia with allies in Brussels, Belgium, on the 24th.

President Biden will depart for Brussels, Belgium, on the afternoon of the 23rd to discuss NATO-level responses to Russia’s invasion of Ukraine. President Zelensky will also participate in the NATO summit via video conference.

International oil prices slightly declined following a sharp rise the previous day. The growing judgment is that the European Union (EU) is unlikely to impose an immediate ban on Russian crude oil, and profit-taking selling emerged after the short-term surge. On the New York Mercantile Exchange, the April West Texas Intermediate (WTI) crude oil price closed at $111.76 per barrel, down 36 cents (0.3%) from the previous session. April contracts expire on this day. The May WTI contract, which becomes the front-month contract the next day, fell 70 cents (0.6%) to $109.27 per barrel.

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