New York Stock Market Rallies on Expectations of Interest Rate Hike Pause... Nasdaq Up 2%

[Asia Economy Reporter Jang Hyowon] The U.S. New York stock market showed an upward trend amid expectations that the Federal Reserve's (Fed) interest rate hikes will soon come to a halt.

On the 23rd (local time), the Dow Jones Industrial Average closed at 33,629.56, up 254.07 points (0.76%) from the previous session. The Standard & Poor's (S&P) 500 index rose 47.20 points (1.19%) to close at 4,019.81, and the Nasdaq index surged 2.01% (223.98 points) to 11,364.41.

[Image source=Yonhap News]

According to Dow Jones Market Data, the S&P 500 and Nasdaq indices reached their highest levels since December 2 of last year, with the Nasdaq recording consecutive two-day gains of over 2%, following a 2.66% rise on the 20th.

The positive momentum in the New York stock market since the new year is due to a series of signals indicating that inflation has peaked and is declining, leading investors to bet that the Federal Reserve's pivot (a shift in monetary policy direction) is approaching.

At the upcoming Federal Open Market Committee (FOMC) regular meeting, held from the 31st of this month to the 1st of next month, it is nearly certain that the benchmark interest rate hike will be reduced to 0.25 percentage points, and there is growing market expectation that rate cuts could begin as early as the second half of the year.

Even hawkish officials who favor monetary tightening, including Fed Governor Christopher Waller, have recently expressed support for a 0.25 percentage point rate hike, reinforcing these expectations. A recent report by The Wall Street Journal (WSJ) indicated a high likelihood that rate hikes will end this spring.

The significant rebound in technology stocks, which suffered large declines last year due to soaring interest rate burdens, is attributed to these reasons.

As of this day, the Nasdaq index, which is technology-stock heavy, has risen more than 8.5% this year, leading the market rally.

On this day, semiconductor stocks such as AMD (9.2%) and Nvidia (7.6%), as well as Tesla (7.7%) and Apple (2.4%), all recorded substantial gains.

Salesforce rose 3.1% on reports of a large stake purchase by hedge fund Elliott Management, and Spotify, which announced large-scale layoffs, also rose 2.1%.

The market is focusing on the fourth-quarter earnings reports of nearly one-fifth of S&P 500 companies, including Microsoft (MS) and Tesla, scheduled for release this week. Meanwhile, some voices caution that market expectations for interest rates may be excessive.

Meanwhile, the 10-year U.S. Treasury yield rose nearly 0.04 percentage points from the previous trading day to the 3.52% range, and the 2-year yield, which is sensitive to the benchmark interest rate, again surpassed 4.2%.

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