New York Stock Market Opens Higher on Nvidia's Strong Earnings

[Asia Economy New York=Special Correspondent Joselgina] Major indices of the U.S. New York stock market started with a slight rise on the 23rd (local time), digesting the minutes of the February Federal Open Market Committee (FOMC) released the day before and Nvidia's earnings announcement. Investors are cautiously awaiting the Personal Consumption Expenditures (PCE) data to be released the next day amid concerns that the Federal Reserve's (Fed) tightening could intensify.

As of 9:53 a.m. at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average was moving at around 33,246 points, up 201.75 points (0.61%) from the previous close. The S&P 500, which focuses on large-cap stocks, rose 33.52 points (0.84%) to around 4,024, while the tech-heavy Nasdaq index recorded 11,617 points, up 110.75 points (0.96%).

Currently, 11 sectors within the S&P 500, excluding utilities, are all showing upward trends. Nvidia jumped more than 13% following its strong earnings report released after the market closed the previous day, fueled by expectations for artificial intelligence (AI). On the other hand, electric vehicle maker Lucid is trading down more than 14% due to weak fourth-quarter sales. Bank of America (BoA) downgraded Lucid's investment rating on the day, citing demand concerns. Dollar General's stock also fell nearly 4% amid forecasts that its earnings would fall short of expectations.

[Image source=Reuters Yonhap News]

The FOMC minutes released the previous afternoon contained content stating that although there are signs that inflation is declining recently, it is not yet sufficient, and interest rate hikes must continue. Participants agreed that the labor market remains very tight, exerting continuous upward pressure on wages and prices. The minutes also revealed that the 0.25 percentage point rate hike at the February FOMC was not a unanimous decision, with a minority advocating for a 0.5 percentage point increase.

Quincy Crosby, Chief Market Strategist at LPL Financial, said, "The February FOMC minutes already included much of what investors had priced in," adding, "Economic data such as the Personal Consumption Expenditures (PCE) to be released on the 24th will be important going forward."

The U.S. economic growth rate for the fourth quarter of last year, released before the market opened on the day, was lower than the previous preliminary estimate. The U.S. Department of Commerce announced that the GDP growth rate for the fourth quarter of last year was preliminarily estimated at an annualized 2.7%. This figure was revised downward by 0.2 percentage points from the preliminary estimate of 2.9%. U.S. growth rates are announced in three stages: preliminary, preliminary revised, and final.

The main reason for the lower growth rate compared to the preliminary estimate is analyzed to be the downward revision of personal consumption expenditures, which account for a significant portion of the U.S. real economy. Consumer spending for the fourth quarter of last year was revised down from the previous preliminary estimate of 2.1% growth to 1.4% growth on this day, a decrease of 0.7 percentage points. Bloomberg reported that this rapid slowdown in personal spending at the end of last year fueled concerns about the U.S. economy but also raised hopes for a so-called soft landing, where inflation can be reduced without a recession.

However, recent data releases have consistently confirmed strong U.S. growth and a robust labor market, sustaining expectations for Fed tightening. The weekly initial jobless claims released on the day also supported this, remaining below 200,000 for six consecutive weeks. According to the U.S. Department of Labor, initial jobless claims for the week of February 12?18 were 192,000, down 3,000 from the previous week. This is below Wall Street's forecast of 200,000. Continuing claims, which represent those applying for unemployment benefits for at least two weeks, also decreased by 37,000 to 1.65 million, below the Wall Street forecast of 1.7 million.

The key will be the upcoming data. The January PCE price index, to be released on the 24th, is estimated to have risen 4.3% year-over-year and 0.4% month-over-month. Since inflation has not been confirmed to be falling faster than market expectations in previously released data such as the January Consumer Price Index, particular attention is focused on the PCE increase, which is the Fed's preferred indicator. Raphael Bostic, President of the Federal Reserve Bank of Atlanta, is also scheduled to speak on the day.

Corporate earnings announcements are also continuing. Nvidia's earnings report, which exceeded Wall Street expectations the previous day, boosted overall investor sentiment.

In the New York bond market, the 10-year U.S. Treasury yield is moving around 3.91%. The 2-year yield, sensitive to monetary policy, is at 4.70%. In the foreign exchange market, the euro traded at $1.0609, remaining steady. The Japanese yen was also at 134.88 yen per dollar, similar to the previous close. The dollar index, which measures the dollar's value against six major currencies, recorded a slight decline to around 104.5.

European stock markets are also showing gains. Germany's DAX index rose 0.87%, the UK's FTSE index increased 0.04%, and France's CAC index moved up 0.72%.

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