[New York Stock Market] Soars on Fed Slowdown Expectations... Nasdaq Up 4.06%

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] The major indices of the U.S. New York stock market closed higher on the 27th (local time) as expectations grew that the Federal Reserve (Fed), which raised interest rates by 0.75 percentage points for two consecutive months, might slow down the pace of hikes going forward. The Nasdaq index, centered on interest rate-sensitive tech stocks, surged by more than 4%.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 32,197.59, up 436.05 points (1.37%) from the previous session. The large-cap S&P 500 index rose 102.56 points (2.62%) to 4,023.61, and the Nasdaq index closed at 12,032.42, up 469.85 points (4.06%). The small-cap Russell 2000 index also ended the day higher at 1,848.34, up 43.09 points (2.39%).

Among individual stocks, tech stocks showed notable strength. Microsoft and Google Alphabet, which reported earnings exceeding market expectations after the previous day's close, jumped 6.69% and 7.66% respectively, leading the overall rally. Other tech stocks scheduled to report earnings after the close, including Meta Platforms (+6.55%), Tesla (+6.17%), and Apple (+3.42%), also rose sharply. Following the U.S. Senate's passage of the Semiconductor Support Act, Nvidia (+7.60%), ADM (+5.36%), and Intel (+3.13%) also closed higher.

Retail stocks, which had plunged the previous day, also showed a rally. Walmart rose 3.78%, while Target and Kohl's closed up 1.84% and 2.77%, respectively. Additionally, Inphase Energy surged nearly 18% after reporting strong earnings. Chipotle Mexican Grill jumped nearly 15% following mixed earnings signals.

Investors closely watched the Fed's Federal Open Market Committee (FOMC) regular meeting for interest rate decisions, Fed Chair Jerome Powell's press conference, and corporate earnings centered on big tech. The Fed announced a 0.75 percentage point increase in the federal funds rate from the previous 1.50-1.75% range to 2.25-2.50%, marking a consecutive giant step following June as expected by the market.

In particular, the New York stock market surged after Chair Powell stated in the afternoon press conference that the pace of rate hikes would eventually slow down. Powell left open the possibility of a third consecutive giant step, saying, "We could see an unusually large rate hike at the next meeting." However, the market focused more on his dovish remarks that "as the monetary policy stance becomes more restrictive, it will be appropriate to slow the pace of rate hikes at some point in the future."

Powell's statement that the U.S. is not in a recession further fueled the market rally. The second-quarter Gross Domestic Product (GDP) data, which can indicate whether the U.S. is in a technical recession, will be released on the 28th.

Gargi Chadouri, Head of Americas Investment Strategy at BlackRock, evaluated, "The Fed acknowledged that its policy could impact economic growth, which provided relief to the stock market." UBS Global pointed out, "Volatility will remain high even after the FOMC. The market is pricing in interest rates rising to 3.3% by year-end, which implies further hikes, but the pace of increases is uncertain." Powell stated on this day that year-end rates would reach 3.0-3.5%.

The earnings season continues. Qualcomm and Meta are scheduled to report earnings after the close today. According to FactSet, more than 150 S&P 500 companies have reported second-quarter earnings so far, with 70% beating market expectations.

U.S. economic indicators showed some improvement. Durable goods orders in June increased by 1.9% month-over-month, exceeding experts' expectations of a 0.4% decline.

In the New York bond market, the 10-year Treasury yield slightly fell to around 2.77% as it digested the Fed's rate hike and future outlook. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's "fear gauge," traded around 23, down more than 5% from the previous session.

Oil prices rose. On the New York Mercantile Exchange, September West Texas Intermediate (WTI) crude oil closed at $97.26 per barrel, up $2.28 (2.40%) from the previous session.

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