[New York Stock Market] S&P 500 Falls Below 4000 for the First Time in Over a Year... Nasdaq Down 4.3%

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The U.S. New York stock market plunged again on the 9th (local time). Concerns continue to be raised about whether the Federal Reserve (Fed) can carry out planned interest rate hikes without pushing the economy into a recession.

On that day, the Dow Jones Industrial Average closed at 32,245.70, down 1.99% (653.67 points) from the previous session. The S&P 500 index fell 3.20% (132.10 points) to 3,991.24, and the tech-heavy Nasdaq index plunged 4.29% (521.41 points) to close at 11,623.25.

CNBC reported that the S&P 500 index falling below the 4,000 mark is the first time in over a year since March 31 of last year.

The current stock price decline is due to investors selling stocks one after another as the Fed's 'big step'?that is, several 0.5 percentage point interest rate hikes following May?was anticipated amid high inflation. Additionally, the Fed's shift to monetary tightening, combined with China's COVID-19 lockdown policies and Russia's invasion of Ukraine, raises the possibility of a global economic recession.

On the same day, Raphael Bostic, President of the Atlanta Federal Reserve, stated in an interview with Bloomberg TV that the economic situation should be assessed after two or three 50 basis point (0.5%) rate hikes. He said, "We need to observe how the market changes while maintaining this pace and speed," adding, "We will move rates by 50 basis points several times, probably two or three times, and then pause to see how the economy reacts and whether inflation approaches our 2% target."

On that day, the 10-year U.S. Treasury yield surpassed 3%, acting as a negative factor for the stock market. CNBC reported that the 10-year Treasury yield reached its highest level since the end of 2018. Bloomberg also reported that the spread between the 5-year and 30-year Treasury yields widened to the largest since mid-March.

Jeff Kilburg, Chief Investment Officer (CIO) of Sanctuary Wealth, said, "This is a significant price adjustment and a serious deviation," adding, "All of this is being created by the Fed's policy." He further stated, "The only way to find a bottom in stocks in the short term depends on whether the Fed has the tools to stabilize (bond) yields, and the 10-year yield needs to return below 3%."

Meanwhile, the decline in tech stocks that has continued since November last year persisted on this day as well. Apple, Microsoft (MS), and Meta Platforms, the parent company of Facebook, saw their stock prices fall more than 3%, while Alphabet, Amazon, and Netflix dropped more than 2%, 5%, and 4%, respectively. Tesla and Nvidia's stock prices fell more than 9%.

Corporate earnings are also weighing on stock prices. Palantir's stock price fell more than 20% after posting earnings below market expectations, Boeing plunged more than 10%, and Chevron dropped 6.7%. Among the 11 sectors within the S&P 500 index, only consumer staples stocks maintained a slight gain, while the other 10 sectors all declined.

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