[New York Stock Market] Slight Rise Amid Caution on Fed Remarks... Dow Up 0.59%

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Major indices of the U.S. New York stock market showed volatile trading on Friday the 18th (local time) as they digested recent remarks from Federal Reserve (Fed) officials, closing with a slight upward trend.

On the day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 33,745.69, up 199.37 points (0.59%) from the previous session. The large-cap S&P 500 index rose 18.78 points (0.48%) to 3,965.34, and the tech-heavy Nasdaq index ended the day at 11,146.06, up 1.11 points (0.01%). Notably, the Nasdaq, composed of interest rate-sensitive tech stocks, showed a downward trend but turned positive just before the close.

Among individual stocks, weakness was confirmed mainly among representative tech stocks. Tesla closed down 1.63% from the previous session. Nvidia fell 1.71%, Netflix dropped 2.47%, and Google Alphabet declined 0.95%. Electric vehicle stocks including Nio (-1.87%), Rivian (-5.39%), and Lucid (-1.75%) also underperformed. On the other hand, bank stocks such as JPMorgan Chase (+0.98%) and Wells Fargo (+1.11%) showed gains. Leading airline stocks Delta Air Lines (+1.20%) and United Airlines (+1.32%) also rose.

Additionally, Foot Locker closed up 8.73% after raising its annual guidance on better-than-expected earnings. Conversely, Chinese e-commerce company JD.com slipped 2.52% despite beating earnings expectations.

Investors remained cautious, closely watching recent Fed officials' hawkish comments and corporate earnings. The earlier optimism for a Fed policy shift following the October Consumer Price Index (CPI) release has largely faded.

Following the previous day’s hawkish remarks by James Bullard, President of the St. Louis Federal Reserve Bank, who said interest rates may need to rise to 5-7%, Boston Fed President Susan Collins continued to support tightening, stating that a 0.75 percentage point rate hike remains on the table. She emphasized the need for further rate increases, saying, "There is more work to be done." She also expressed confidence that inflation can be curbed without causing significant damage to the labor market.

Stephanie Lang, Chief Investment Officer at Homrich Berg, said, "After the big rally following the CPI release, the market is digesting recent data, which is bringing the situation back to reality," adding, "We are seeing the market readjust as Fed officials reiterate their (hawkish) stance."

Shelby McFaddin, investment analyst at Motley Fool Asset Management, assessed that recent hawkish comments have led investors to believe the Fed does not think the economy has cooled sufficiently. He noted, "It depends on what the Fed does next."

Concerns over tightening and resulting recession fears persisted, pushing Treasury yields higher. Rising Treasury yields indicate increased demand for safe-haven government bonds, causing bond prices to fall. In the New York bond market, the 10-year Treasury yield rose to around 3.82%. The 2-year yield, sensitive to monetary policy, climbed to about 4.52%. The inversion of the yield curve, where the long-term 10-year yield exceeds the 2-year and 3-month yields (4.25%), continues. This phenomenon is typically interpreted as a precursor to recession.

Economic indicators were weak. The U.S. leading economic index fell for the eighth consecutive month in October. According to the Conference Board, the U.S. leading economic index dropped 0.8% from the previous month to 114.9 in October, below market expectations. The Conference Board warned, "This is the eighth consecutive month of decline," suggesting the economy may already be in recession.

Rising interest rates are also signaling a slowdown in the housing market. U.S. monthly home sales have declined for nine consecutive months. According to the National Association of Realtors (NAR), existing home sales in October fell 5.9% from the previous month to 4.43 million units, the lowest since May 2020. This marks the longest consecutive decline since the NAR began tracking statistics in 1999, with nine straight months of decreases since February.

The dollar, a representative safe-haven asset, showed an upward trend. The Dollar Index, which measures the dollar's value against six major currencies, approached the 107 level. The Bloomberg Dollar Spot Index also rose 0.2%, reaching its highest level since November 10.

Currently, investors are also monitoring the possibility of tightened COVID-19 restrictions in China as confirmed cases rise. The number of confirmed cases in China has surged nearly sevenfold over the past two weeks. On the previous day, new domestic infections excluding imported cases exceeded 24,000.

Oil prices fell amid concerns over strengthened COVID-19 restrictions. At the New York Mercantile Exchange, December West Texas Intermediate (WTI) crude oil prices closed at $80.08 per barrel, down $1.56 (1.91%) from the previous session. This closing price is the lowest since September 30.

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