[New York Stock Market] Nasdaq Rises 2% on Expectations of FOMC Slowdown...

[Asia Economy New York=Special Correspondent Joselgina] Major indices on the U.S. New York stock market closed higher on the 23rd (local time). With expectations of a baby step (0.25 percentage point increase in the benchmark interest rate) for additional pace adjustment at the upcoming Federal Open Market Committee (FOMC) regular meeting next week, a rally in representative technology stocks sensitive to interest rates continued.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 33,629.56, up 254.07 points (0.76%) from the previous session. The large-cap focused S&P 500 index rose 47.20 points (1.19%) to 4,019.81, and the tech-heavy Nasdaq index closed at 11,364.41, up 223.98 points (2.01%).

Within the S&P 500, all 10 sectors except energy stocks rose. The rally in technology stocks sensitive to interest rates was particularly notable. Tesla closed up 7.74% from the previous session. Apple rose 2.35%, and Google Alphabet increased by 1.81%. Semiconductor company AMD jumped more than 9% after Barclays upgraded its investment rating. Other semiconductor stocks such as Nvidia (+7.59%), Intel (+3.59%), and Qualcomm (+6.62%) also showed gains. Salesforce closed up 3.05% following news that activist investment firm Elliott Management had acquired a large stake in Salesforce.

Investors are closely watching the upcoming FOMC regular meeting and corporate earnings announcements next week. As the recent inflation slowdown trend continues to be confirmed by indicators, there is speculation that the Federal Reserve (Fed) will narrow the rate hike to 0.25 percentage points.

Earlier, remarks by Fed officials including Governor Christopher Waller also emphasized a 0.25 percentage point increase. The Wall Street Journal (WSJ) reported the day before that the Fed’s rate hikes are nearing their end and that the rate hike campaign could stop by this spring. The publication also noted that discussions about when to halt rate hikes could take place at the February meeting.

According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds (FF) rate futures market currently reflects more than a 98% probability of a 0.25 percentage point rate hike in February.

However, investors remain cautious, not ruling out the possibility that the Fed may maintain a high level of interest rates for a considerable period even after stopping rate hikes. Mohamed El-Erian, Chief Advisor at Allianz, appeared on CNBC’s Squawk Box and warned that if the Fed decides on a 0.25 percentage point hike at the February FOMC, it could be a “mistake.” He said, “I still think there is an inflation problem,” and predicted that inflationary upward pressure would continue due to factors such as rising energy prices following China’s reopening.

This week, corporate earnings announcements will continue. After the market closes today, Zions Bancorporation, Brown & Brown, and Crane Holdings will release their earnings. Companies reporting earnings this week include Blackstone, Boeing, Comcast, IBM, Microsoft, and Tesla.

According to Refinitiv, 57 companies within the S&P 500 have disclosed quarterly earnings so far, with 63% exceeding market expectations. However, CNBC reported that due to rate hikes and recession concerns, the growth rate of net profits is not higher than in previous years.

In the New York bond market, Treasury yields rose in anticipation of the February FOMC. The 10-year U.S. Treasury yield rose to around 3.52%. The 2-year yield, which is sensitive to monetary policy, stood at about 4.23%.

International oil prices showed an upward trend on expectations of demand from China but turned slightly lower before the close. On the New York Mercantile Exchange, March delivery West Texas Intermediate (WTI) crude oil prices closed at $81.62 per barrel, down 2 cents (0.02%) from the previous session.

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