[New York Stock Market] Dow Drops Over 1,000 Points as Powell Confirms 'High Interest Rates to Persist' with 3%+ Plunge...

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[Asia Economy New York=Special Correspondent Joselgina] Major indices on the U.S. New York Stock Exchange closed lower on the 26th (local time) following Federal Reserve (Fed) Chair Jerome Powell's 'hawkish' speech at the Jackson Hole meeting, which warned against premature shifts to easing policies. The Dow Jones Industrial Average, composed of blue-chip stocks, fell by more than 1,000 points.

At the New York Stock Exchange (NYSE) that day, the Dow closed at 32,283.40, down 1,008.38 points (3.03%) from the previous session. The S&P 500, focused on large-cap stocks, ended at 4,057.66, down 141.46 points (3.37%), and the tech-heavy Nasdaq closed at 12,141.71, falling 497.55 points (3.94%).

By individual stocks, gold prices plunged, leading to weakness in gold mining stocks. Kirkland Mining closed down 8.28% from the previous session. IAMGOLD also slipped 7.97%. Interest rate-sensitive tech stocks also underperformed. Tesla fell 2.70% from the previous close. Apple dropped 3.77% amid news that the U.S. Department of Justice is considering an antitrust investigation. Meta Platforms (-4.15%), Netflix (-4.57%), Microsoft (-3.86%), and Alphabet (-5.41%) also declined across the board.

Farfetch surged more than 26% after exceeding earnings expectations. Dell Technologies fell over 13% due to a negative outlook on the PC market. Electronic Arts rose more than 3% following news reports that Amazon might propose an acquisition. Additionally, Moderna and Pfizer closed down 3.7% and 2.25%, respectively, after news emerged that Moderna filed intellectual property infringement lawsuits against Pfizer and others.

Investors closely watched the Fed's preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index, and Chair Powell's speech at the Jackson Hole meeting that day.

The July PCE price index, released before the market opened, fell 0.1% from the previous month, indicating easing inflationary pressures. This was the first monthly decline in the PCE price index since April 2020, early in the pandemic. Compared to the same month last year, it rose 6.3%, but the increase slowed from June. This was analyzed as reflecting a decline in energy prices such as gasoline.

However, after Chair Powell's remarks, the New York stock market widened its losses. The market, which had hoped for a rate cut in the first half of next year, saw a wave of sell-offs following more hawkish-than-expected comments.

At the two-day economic policy symposium, the 'Jackson Hole Meeting,' held in Jackson Hole, Wyoming, Chair Powell reaffirmed the tightening stance, stating, "We must maintain a restrictive stance for the time being." He expressed concerns about the economic impact of tightening, saying, "Unfortunately, reducing inflation comes with costs," but emphasized that "failure to stabilize prices will inevitably lead to greater pain," prioritizing inflation control above all. He indicated a willingness to accept some economic slowdown. Furthermore, he strongly warned against premature easing policies based on historical lessons, drawing a line under market expectations for rate cuts next year.

The interest rate futures market is pricing in a third consecutive giant step (0.75 percentage point rate hike). According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds (FF) futures market currently reflects over a 60% probability that the Fed will raise rates by 0.75 percentage points in September. Although this is down from 64% the previous day, it remains a higher bet than a 0.50 percentage point increase. After the inflation data release in the morning, the giant step bet fell to the 50% range but later recovered to around 60%.

In the New York bond market, the 10-year Treasury yield rose following Chair Powell's remarks, reaching around 3.03%. During the session, it also touched 3.08%.

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's 'fear gauge,' surged more than 17% from the previous session, hovering around the 25 level.

Gold prices plunged for the first time in four trading days as Powell's remarks were interpreted as hawkish. The psychological support level of $1,750 per ounce was breached. December gold futures closed at $1,749.80 per ounce, down 1.2% from the previous session.

International oil prices rose on the possibility of production cuts by OPEC member countries. On the New York Mercantile Exchange, October West Texas Intermediate (WTI) crude oil closed at $93.06 per barrel, up 54 cents (0.58%) from the previous session.

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