[New York Stock Market] Decline Amid Inflation and Ukraine Concerns... Nasdaq Down 9% in Q1

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Major indices of the U.S. New York stock market closed lower on March 31 (local time), the last trading day of March, amid inflation and geopolitical concerns, ending a gloomy first quarter. The Nasdaq index, which is tech-heavy, saw its first-quarter decline approach 10%. The Dow Jones Industrial Average, composed of blue-chip stocks, and the large-cap-focused S&P 500 index also slipped by around 5% each.

On this day at the New York Stock Exchange (NYSE), the Dow closed at 34,678.35, down 550.46 points (1.56%) from the previous session. The S&P 500 fell 72.04 points (1.57%) to 4,530.41, and the Nasdaq dropped 221.76 points (1.54%) to 14,220.52. All three major indices declined for the second consecutive trading day.

By sector, semiconductor and technology hardware stocks underperformed. AMD's stock price slid more than 8% after Barclays analysts downgraded their investment opinion from overweight to hold. HP Inc. and Dell also closed down 6.54% and 7.60%, respectively, following Morgan Stanley's downgrade from overweight to hold.

Leading tech stocks such as Tesla (-1.50%), Apple (-1.61%), Microsoft (-1.56%), and Nvidia (-1.46%) also fell more than 1% compared to the previous session. Walgreens Boots Alliance, a pharmacy chain, dropped over 5% despite maintaining its annual net profit forecast, due to concerns over demand for COVID-19 related products. Bank stocks like Goldman Sachs (-1.64%) and JPMorgan Chase (-3.00%) were also weak.

Investors focused on the inflation data released that day, the decline in oil prices, and geopolitical risks between Russia and Ukraine.

The core Personal Consumption Expenditures (PCE) price index, the inflation gauge preferred by the U.S. Federal Reserve (Fed), remained at its highest level in over 40 years in February, heightening inflation concerns. According to the U.S. Department of Commerce, the core PCE price index rose 5.4% year-over-year in February. This figure is the highest since April 1983 (5.5%). The February PCE price index, which includes volatile food and energy, increased 6.4% compared to the same period last year, marking the highest level since January 1982.

Considering that the core PCE is the Fed's preferred inflation indicator, hawkish views advocating for an accelerated tightening path are expected to gain more weight.

Oil prices fell sharply on news that the U.S. government would release the largest-ever amount of strategic reserves. On the New York Mercantile Exchange, May West Texas Intermediate (WTI) crude oil closed at $100.28 per barrel, down $7.54 (7%) from the previous session.

U.S. President Joe Biden announced plans to release 1 million barrels per day from strategic reserves over the next six months to curb rising oil prices. This is the largest release in history. Up to 180 million barrels of reserves will be released over six months. President Biden said it is difficult to comment on the immediate impact of this release but mentioned that gasoline prices could drop by 10 to 35 cents per gallon in the future.

Geopolitical tensions stemming from Russia's invasion of Ukraine continue. Peace talks between Russian and Ukrainian delegations are expected to resume online on April 1. However, the U.S. and the North Atlantic Treaty Organization (NATO) remain cautious, viewing the Russian troop movements in Ukraine not as withdrawals but as redeployments. British intelligence reported that Russian forces maintained positions near Kyiv, the capital of Ukraine, and conducted shelling.

George Mateyo, Chief Investment Officer at Key Private Bank, said, "Unfortunately, there is a mix of good news and bad news," adding, "This will create volatility."

This day was the last trading day of March and the first quarter. CNBC reported that although the New York stock market rallied in the latter half of the month, it recorded the worst quarterly performance in two years. The Dow and S&P 500 indices fell 4.8% and 5.2%, respectively, in the first quarter. The Nasdaq dropped more than 9%. This was due to the start of the Fed's rate hike cycle, soaring inflation, and Russia's invasion of Ukraine.

The unemployment data released that day was weaker than expected. For the week ending March 26, initial jobless claims rose by 14,000 to 202,000 compared to the previous week. Although slightly above market expectations, the figure remains around 200,000. Personal income increased by 0.5%, meeting market expectations, while consumer spending fell short of forecasts.

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