[New York Stock Market] Tightening Concerns Ahead of Jackson Hole Meeting... Nasdaq Down 2.55%

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Major indices of the U.S. New York stock market closed lower on the 22nd (local time) ahead of the annual economic forum 'Jackson Hole Meeting,' which can gauge the direction of the Federal Reserve's (Fed) monetary policy. This was due to the spread of concerns that the so-called 'summer rally' has disappeared and high-intensity tightening may continue. The U.S. 10-year Treasury yield surpassed the 3% level again for the first time in about a month.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 33,063.61, down 643.13 points (1.91%) from the previous session. The large-cap S&P 500 index fell 90.49 points (2.14%) to 4,137.99, and the tech-heavy Nasdaq index dropped 323.64 points (2.55%) to 12,381.57.

The decline in the Dow and S&P 500 was the largest daily drop since June 16.

By sector, all sectors of the S&P 500 continued to decline, with weakness confirmed in interest rate-sensitive tech stocks. Tesla announced a 25% price increase for its Full Self-Driving (FSD) software but still closed down 2.28% from the previous session. Meta, Facebook's parent company (-2.89%), Apple (-2.30%), Alphabet, Google's parent company (-2.53%), and Microsoft (-2.94%) all fell more than 2%. Netflix plunged 6.06% after CFRA downgraded it.

Airline stocks were also weak. United Airlines Holdings (-3.04%), Delta Air Lines (-2.62%), and American Airlines (-3.25%) all saw their stock prices fall. Major financial stocks such as JPMorgan Chase (-1.65%), Bank of America (-2.14%), and Wells Fargo (-2.07%) also slipped. Energy stocks declined but were considered to have held up relatively well compared to other sectors.

Additionally, AMC Entertainment's stock plummeted 41.95% from the previous session amid competitor Cineworld's bankruptcy review and the start of trading of preferred shares 'APE.' Bed Bath & Beyond, a representative meme stock that soared but crashed last week after news of Ryan Cohen, GameStop chairman's stock sale, also closed down more than 16%. Signify Health surged over 32% following reports that Amazon is considering an acquisition.

Investors awaited the Jackson Hole Meeting, closely watching the Fed's path, Treasury yields, and dollar movements. Amid recent signals of inflation easing, they seemed to seek hints about the pace of tightening from Federal Reserve Chair Jerome Powell's latest remarks at Jackson Hole. Robert Cantwell, portfolio manager at UpHoldings, commented on the market decline, saying, "This indicates that the Fed is saying it must accept more aggressive economic slowdown to bring inflation down again."

Ahead of the September Federal Open Market Committee (FOMC) meeting, hawkish remarks from Fed officials have poured in daily, shifting market expectations back toward high-intensity tightening. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds (FF) futures market currently prices a 45.5% chance of a 0.5% rate hike in September, down from 61.0% last week and 53% the day before. Conversely, the probability of a 0.75% rate hike has risen from 39% a week ago to 47% the day before and 54.5% on this day.

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's 'fear index,' surged more than 15% from the previous session to around 23.

In the New York bond market on this day, Treasury yields surged. The 10-year yield surpassed 3% again, marking the first time since July 21 that it exceeded the 3% level. It even reached 3.04% intraday. The 2-year yield, sensitive to monetary policy, also rose to around 3.32%. Treasury yields move inversely to Treasury prices.

The Dollar Index, which shows the value of the dollar against six major currencies, briefly exceeded 109 on this day, the highest since mid-July. Amid dollar strength, the euro traded at $0.9928 per euro, down 1.1% intraday from the previous session, marking its lowest level in 20 years.

Economic indicators released on this day confirmed improvement. The Chicago Federal Reserve Bank announced that the July National Activity Index (NAI) recorded 0.27, rebounding to positive territory for the first time in three months. A positive reading indicates that economic conditions have improved compared to the long-term average growth rate of the economy.

Market experts said the market is cautious about Chair Powell's hawkish remarks. Michael Schumacher of Wells Fargo said the market expects Chair Powell to make tough comments on rate hikes following recent Fed officials' remarks. However, he also noted that it is uncertain whether Powell will indeed make hawkish remarks. David Kostin, head of U.S. equity strategy at Goldman Sachs, predicted, "Ultimately, the path of inflation and growth will determine the market trajectory through the end of the year."

On this day at the New York Mercantile Exchange, September West Texas Intermediate (WTI) crude oil prices closed at $90.23 per barrel, down 54 cents (0.59%) from the previous session. International oil prices continue to face downward pressure due to dollar strength and concerns over Europe's energy crisis.

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