[New York Stock Market] First Trading Day of Second Half, Dow Up 1.05%... 10-Year Bond Yield Falls Below 3%

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] The U.S. New York stock market, which ended the worst first half in over 50 years, showed volatility and closed higher across the board on July 1 (local time), the first trading day of the second half. Amid ongoing recession concerns, the 10-year Treasury yield fell below the 3% mark.

On the day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 31,097.26, up 321.83 points (1.05%) from the previous session. The large-cap S&P 500 index rose 39.95 points (1.06%) to 3,825.33, and the tech-heavy Nasdaq index closed at 11,127, up 99.11 points (0.90%).

By sector, home construction stocks showed strength in the afternoon session. PulteGroup closed up 6.69% from the previous session. Lennar rose 5.71%, and D.R. Horton jumped 8.01%.

Conversely, semiconductor stocks weakened. Micron Technology fell nearly 3% amid disappointment over its Q4 earnings outlook. Other semiconductor stocks also declined sharply, including Nvidia (-4.20%), Western Digital (-3.15%), Qualcomm (-3.30%), and AMD (-3.66%).

Department store chain Kohl's plunged 19.64% after lowering its sales forecast and announcing it would halt the sale of some business units. General Motors (GM) closed up 1.35%, maintaining its earnings outlook despite supply chain concerns.

Investors, facing the weekend and the Independence Day holiday (July 4), closely monitored economic indicators and Treasury yield movements amid recession fears. According to the Institute for Supply Management (ISM), the June manufacturing Purchasing Managers' Index (PMI) was 53.0, the lowest since June 2020 (52.4), and below market expectations. The new orders index also fell from 55.1 to 49.2, dropping below the contraction threshold of 50 for the first time since May 2020.

On the same day, S&P Global's June U.S. manufacturing PMI was 52.7, the lowest since July 2020. It sharply declined from 57.0 the previous month, indicating a slowdown in manufacturing activity.

With these recent economic indicators showing continued weakness, concerns about a U.S. recession are spreading. The Atlanta Federal Reserve Bank's estimate for U.S. real GDP growth in Q2 dropped to -1.0%. If this trend continues, a 'technical recession'?defined as two consecutive quarters of negative growth?could become a reality.

Amid recession fears, the 10-year U.S. Treasury yield slid to around 2.88% in the New York bond market. This is the first time since early June that the 10-year yield has fallen below 3%. The decline in Treasury yields indicates increased demand for safe-haven government bonds, pushing bond prices higher.

The price of gold, a representative safe-haven asset, rose. On the New York Commodity Exchange (COMEX), gold prices moved slightly higher to around $1,807 per ounce compared to the previous session.

On the same day at the New York Mercantile Exchange, August West Texas Intermediate (WTI) crude oil prices closed at $108.43 per barrel, up $2.67 (2.52%) from the previous session.

Market experts believe that a market rebound will be difficult until there is clear evidence that inflation is declining. Although the three major indices closed higher on the day, they all fell on a weekly basis. The S&P 500, reflecting the stock prices of the top 500 U.S. companies, saw a weekly decline approaching 7%. The Dow fell 1.3%, and the Nasdaq dropped 4.1%.

Roy Mayfield, investment strategy analyst at Baird, pointed to inflation as the underlying cause of the worst stock market performance in the first half of the year, stating, "Until inflation and inflation expectations are sufficiently controlled and the Federal Reserve (Fed) at least withdraws hawkish comments, a new bull market will not continue."

Due to inflation and recession fears that have weighed on the market throughout the year, the S&P 500 had fallen more than 20% by the last trading day of the first half. This represents the worst decline for the first half of the year since 1970.

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