[New York Stock Market] Slight Decline Amid Tightening Concerns... Dow and S&P 500 Fall for 3 Consecutive Trading Days

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Major indices of the U.S. New York stock market closed slightly lower on the 23rd (local time) amid ongoing concerns about tightening by the central bank, the Federal Reserve (Fed), as investors awaited this week's Jackson Hole meeting.

On the New York Stock Exchange (NYSE) that day, the Dow Jones Industrial Average closed at 32,909.59, down 154.02 points (0.47%) from the previous session. The S&P 500, focused on large-cap stocks, ended at 4,128.73, down 9.26 points (0.22%), and the tech-heavy Nasdaq closed at 12,381.30, down 0.27 points (0.00%). The Dow and S&P 500 continued their decline for the third consecutive trading day.

By sector, healthcare, real estate, and utilities underperformed, while energy stocks rallied supported by rising oil prices. Leading energy stock ExxonMobil closed up 4.24% from the previous session. Marathon Oil (+4.30%), Schlumberger (+6.61%), and Chevron (+3.24%) also rose together.

Technology stocks were generally weak with mixed results. Meta Platforms fell 1.19%. Netflix dropped 0.88%, and Microsoft slipped 0.47%. On the other hand, Tesla rose 2.26%. Nvidia (+0.86%) and Broadcom (+0.19%) also saw slight gains. Intel rose 0.33% following news of a $30 billion partnership with Brookfield Asset Management to build a semiconductor factory.

Additionally, Zoom Video plummeted more than 16% after lowering its annual earnings guidance. Cybersecurity company Palo Alto Networks jumped over 12% after reporting strong results that exceeded market expectations. U.S. department store brand Macy's also rose nearly 4% on news that its quarterly earnings beat estimates.

Investors closely watched the pace of Fed rate hikes and Treasury yields ahead of this week's Jackson Hole meeting. With monetary policy responses becoming more critical amid inflation and economic slowdown concerns, attention is focused on the message Fed Chair Jerome Powell will deliver at Jackson Hole on the 26th. Depending on the hawkishness of his remarks, global financial markets could experience another significant shakeup.

Market caution over tightening has already intensified. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds (FF) rate futures market currently prices in a 52.5% chance that the Fed will implement a third consecutive giant step (0.75 percentage point hike) in September. This is slightly lower than the 55% from the previous day but significantly higher than the 41% a week ago. The market is leaning more toward a 0.75 percentage point increase rather than 0.5 percentage points.

In the New York bond market that day, the yield on the U.S. 10-year Treasury note continued its upward trend as investors awaited hawkish remarks from Chair Powell at the Jackson Hole meeting. The 10-year yield hovered around 3.06%. After surpassing 3% for the first time in about a month the previous day, it maintained that level. The 10-year yield initially declined in early trading but surged to 3.07% following the release of housing data. July new home sales fell 12.6%.

Ahead of the Jackson Hole meeting, the recently strong U.S. dollar paused. The dollar index, which reflects the value of the dollar against six major currencies, recorded a slight decline to 108.54 compared to the previous session.

Market volatility increased. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's "fear gauge," rose more than 1% to around 24. UBS predicted, "Volatility in the stock market will continue as investor sentiment wavers between expectations that the Fed will successfully guide the U.S. economy to a soft landing and fears that it will not." Lisa Salet, head of the Global Investment Committee at Morgan Stanley Wealth Management, pointed out that investors are underestimating risks related to inflation and recession.

Oil prices rose. On the New York Mercantile Exchange, October West Texas Intermediate (WTI) crude oil closed at $93.74 per barrel, up about $3.38 (3.74%) from the previous session. This was influenced by Saudi Arabia's mention of possible production cuts. This is the highest level since the 11th of this month.

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