[New York Stock Market] Rising Tightening Concerns on Employment Data... Sharp Surge in Treasury Yields, Nasdaq Down 2.47%

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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 3rd (local time) as stronger-than-expected employment data heightened concerns over tightening. All three major indices ended the week in the red. In the bond market, the yield on the U.S. 10-year Treasury note surged intraday to the 2.98% range.

On the day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 32,899.70, down 348.58 points (1.05%) from the previous session. The large-cap S&P 500 index fell 68.28 points (1.63%) to 4,108.54, and the tech-heavy Nasdaq index dropped 304.16 points (2.47%) to 12,012.73. The small-cap Russell 2000 index also slid 14.62 points (0.77%) to 1,883.05.

Among individual stocks, the retreat of interest rate-sensitive tech stocks was notable. Micron Technology closed down 7.20% from the previous session. Nvidia fell 4.45%, and Meta dropped 4.06%. Apple declined nearly 4% following a Morgan Stanley report suggesting that the slowdown in App Store growth would have a short-term negative impact.

Tesla’s stock price slid 9.22% after reports emerged that CEO Elon Musk sent an email stating he wants to cut 10% of the workforce and halt all hiring. In the email, Musk also described the economy as "very bad" to executives. This drew more attention following JPMorgan Chase CEO Jamie Dimon’s earlier warning to prepare for an economic hurricane.

Lucid and Rivian also fell more than 6% and 5%, respectively.

Investors closely watched the Labor Department’s May employment report, Treasury yield movements, and the Federal Reserve’s tightening path. According to the Labor Department, nonfarm payrolls increased by 390,000 in May, exceeding expectations. The unemployment rate remained steady at 3.6%, and the labor force participation rate rose slightly to 62.3%.

Despite ongoing concerns about economic slowdown, the strong labor market confirmed heightened investor caution toward tightening. Tom Essaye of The Sevens Report said, "This is a signal that the labor market remains very tight," adding that it "will overturn hopes that the Fed will consider pausing rate hikes in September after increases in June and July."

Loretta Mester, president of the Cleveland Federal Reserve Bank, expressed support for aggressive rate hikes going forward, stating she has not seen sufficient evidence that inflation has peaked. The day before, Fed Vice Chair Lael Brainard appeared on CNBC and dismissed the possibility of pausing rate hikes in September, saying, "It is difficult to find grounds to stop."

Treasury yields also rose amid tightening concerns. The 10-year yield surged to 2.98%, close to 3%, before narrowing gains to around 2.948%.

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street’s "fear gauge," rose slightly from the previous session to the 24 range.

Despite the rally the previous day, major New York stock indices ended the week in decline. The S&P 500 fell 1.2% for the week, while the Dow and Nasdaq each dropped close to 1%.

Oil prices rose amid ongoing supply concerns despite the decision by OPEC Plus (+) oil-producing countries to increase production. At the New York Mercantile Exchange, July West Texas Intermediate (WTI) crude oil closed at $118.87 per barrel, up $2 (1.71%) from the previous session.

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