[New York Stock Market] Rises on Strong Economic Indicators... Nasdaq Up 2.59%

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Major indices on the U.S. New York stock market closed higher on the 3rd (local time), buoyed by strong economic indicators and optimistic corporate earnings.

On the day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average rose 416.33 points (1.29%) from the previous close to finish at 32,812.50. The S&P 500, which focuses on large-cap stocks, gained 63.98 points (1.56%) to close at 4,155.17, while the tech-heavy Nasdaq index climbed 319.40 points (2.59%) to end at 12,668.16.

By sector, strength was seen mainly in technology and consumer goods stocks. PayPal led the Nasdaq rally, rising 9.25% after reporting strong earnings and announcing a share buyback plan. Representative tech stocks such as Tesla (+2.27%), Apple (+3.82%), Meta Platforms (+5.37%), Microsoft (+2.78%), and Nvidia (+1.98%) all rose together. Robinhood, which announced the layoff of 23% of its staff the previous day, saw its stock surge more than 11%.

Moderna soared nearly 16% on strong earnings. CVS Health also jumped 6.30% after releasing its results. Under Armour closed up 2.55% on sales that exceeded market expectations. Disney, which is scheduled to report earnings next week, rose 4.12%. On the other hand, AMD fell 1.21% despite better-than-expected earnings.

Investors closely watched the economic data, corporate earnings, and Federal Reserve (Fed) officials’ remarks released that day. The Institute for Supply Management (ISM) reported that the July Non-Manufacturing Purchasing Managers’ Index (PMI) rose to 56.7 from 55.3 in the previous month. This improvement in the service sector, which exceeded market expectations, helped restore overall market investor sentiment. Economic media CNBC reported, "The surprising improvement in the Services PMI dispelled fears that the U.S. is already in a recession and pushed traders back into the sharply falling tech stocks."

Sub-indices of the ISM Non-Manufacturing PMI, including new orders and employment, both showed growth, easing concerns about economic slowdown or recession that had dominated the market. Durable goods and manufacturing data for June were also better than expected. On the same day, S&P Global’s final July Services PMI was 47.3, below the 50 mark but improved from the preliminary reading of 47.

Additionally, corporate earnings released that day from Moderna, CVS Health, PayPal, and Under Armour generally exceeded market expectations, supporting the stock rally. As the earnings season continues, CNBC noted that investors are hopeful that the recovery is not just a rally amid a bear market but could signal the start of a new bull market. Geopolitical risks, which had escalated the previous day due to U.S. House Speaker Nancy Pelosi’s visit to Taiwan, eased as her visit concluded.

Optimistic economic data pushed the 10-year U.S. Treasury yield higher in the New York bond market. The 10-year yield rose to around 2.7%. However, the 2-year yield, which is sensitive to monetary policy, remained above 3%, maintaining an inversion of the yield curve. Such an inversion is typically seen as a precursor to a recession.

Hawkish remarks from Fed officials continued on the day. James Bullard, President of the Federal Reserve Bank of St. Louis and a prominent hawk, stated that an additional 1.5 percentage points of rate hikes would be necessary by year-end. Speaking on CNBC, he said, "Inflation is actually easing across all sectors, and to get clear evidence that it is definitely coming down, the policy rate needs to stay higher for longer." The year-end rate of 3.75?4% that Bullard suggested far exceeds market expectations.

However, Bullard drew a line on recession concerns. He said, "We are not currently in a recession," adding, "All jobs increased in the first half of the year, and with unemployment at only 3.6%, it is hard to say we are in a recession."

The U.S. dollar strengthened. The dollar index, which measures the value of the dollar against six major currencies, rose to around 106. Due to the dollar’s strength, gold prices, a representative safe haven asset, fell. On the New York Mercantile Exchange, December gold futures closed at $1,776.40 per ounce, down $13.30 (0.7%) from the previous session.

Oil prices declined. On the New York Mercantile Exchange, September West Texas Intermediate (WTI) crude oil futures closed at $90.66 per barrel, down $3.76 (4%) from the previous session, marking the lowest closing price since February 10. Despite oil-producing countries reducing their planned production increase for September, U.S. crude inventories rose for the first time in three weeks, driving the price down.

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