[New York Stock Market] Powell's '0.5%P Hike' Remark... Nasdaq Down 2.07%

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[Asia Economy New York=Special Correspondent Joselgina] Major indices on the U.S. New York stock market closed lower on the 21st (local time) as a sharp rise in Treasury yields offset optimism surrounding corporate earnings. Federal Reserve (Fed) Chair Jerome Powell's remark that a 0.5 percentage point rate hike could be proposed at next month's Federal Open Market Committee (FOMC) meeting dealt a direct blow in the latter part of the session.

On the day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 34,792.76, down 368.03 points (1.05%) from the previous session. The large-cap S&P 500 index fell 65.79 points (1.48%) to 4,393.66, while the tech-heavy Nasdaq index dropped 278.41 points (2.07%) to 13,174.65.

By sector, energy and materials stocks showed weakness. Mosaic closed down 9.38% from the previous session. Chevron also slipped nearly 5%.

Tesla rose more than 3%, buoyed by its first-quarter earnings announced after the previous day's close. However, other major tech stocks such as Nvidia (-6.05%), Meta (-6.16%), AMD (-4.7%), and Salesforce (-4.6%) showed declines. Netflix, which had plunged over 35% the day before, fell more than 3% again. It is assessed that billionaire investor Bill Ackman's complete liquidation of his Netflix holdings further dampened investor sentiment.

CNN's ambitious news streaming service CNN+, which was launched recently, decided to shut down after just one month, causing Warner Bros. Discovery's stock to drop 6.78%.

On the other hand, United Airlines surged 9.31% after announcing it expects to return to profitability in 2022. American Airlines also rose nearly 4%, supported by better-than-expected earnings. AT&T closed up 4.01% after reporting quarterly net income exceeding expectations. Additionally, news emerged that Tesla CEO Elon Musk took out a bank loan using Tesla shares as collateral to acquire the social media platform Twitter, but Twitter's stock rose only 0.77%.

Investors monitored the generally positive corporate earnings announcements from after the previous day's close through the morning, while paying close attention to Treasury yield trends and Fed Chair Jerome Powell's remarks. Powell participated in a panel discussion at the International Monetary Fund (IMF) annual meeting held in Washington, D.C., stating, "From my perspective, moving a bit faster is appropriate," and that "a 0.5 percentage point rate hike could be proposed."

This statement attracted attention as it was the last official opportunity to hear Powell's message before the FOMC meeting scheduled for May 3-4. Following Powell's remarks, the decline in the New York stock market was particularly pronounced in the yield-sensitive Nasdaq index.

In the bond market, the U.S. 10-year Treasury yield hit 2.954% intraday and is currently hovering around 2.89%. This is a sharp increase compared to the 1.5% level at the end of last year. The 2-year yield, which is sensitive to monetary policy, stands at about 2.68%.

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's "fear gauge," rose more than 11% from the previous session to around 22.

The economic indicators released on the day were somewhat disappointing. The weekly initial jobless claims as of the 16th decreased by 2,000 to 184,000, exceeding market expectations. The Philadelphia Fed Index, a manufacturing indicator for the Philadelphia Federal Reserve district, dropped significantly to 17.6 in April from 27.4 the previous month.

Oil prices rose due to the European Union's (EU) potential ban on Russian crude oil imports and supply disruptions in Libya. On the New York Mercantile Exchange, June West Texas Intermediate (WTI) crude oil closed at $103.79 per barrel, up $1.60 (1.6%) from the previous session. Earlier, Politico reported that EU officials are fine-tuning a plan to phase out Russian crude oil imports, which could be submitted as early as next week.

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