New York Stock Market Opens Lower Amid Rising Treasury Yields

Major indices on the U.S. New York Stock Exchange opened slightly lower on the 1st (local time) amid ongoing concerns about Federal Reserve (Fed) tightening, closely watching key economic indicators and movements in Treasury yields. Despite news that China's manufacturing PMI hit its highest level in nearly 11 years, tightening concerns that weighed on the market throughout February persist. The 10-year U.S. Treasury yield is approaching the psychological resistance level of 4%.

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As of 10:07 a.m. at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average was down 41.79 points (0.13%) from the previous close, trading around the 32,614 level. The large-cap S&P 500 index fell 15.36 points (0.39%) to about 3,954, while the tech-heavy Nasdaq index dropped 44.97 points (0.39%) to 11,410.

The New York stock market started lower and showed slight volatility with some indicators turning positive, but after 10 a.m., all indices returned to a downward trend. Currently, within the S&P 500, eight sectors are declining, excluding energy, materials, and industrial stocks.

Tesla is trading more than 3% lower ahead of its Investor Day event scheduled for the afternoon. Rivian is down over 13% following mixed Q4 earnings and disappointing production outlooks. Department store chain Kohl's fell slightly after releasing earnings before the market open that significantly missed expectations. Kohl's reported a Q4 net loss per share of $2.49 and expects sales to decline by 2-4% this year. On the other hand, Procter & Gamble is rising after UBS upgraded its rating to buy. Alibaba also jumped more than 3.6% on the back of strong Chinese economic data.

Earlier, China's February manufacturing PMI was released at 52.6, significantly exceeding both the previous month and market expectations. This is the highest reading in 10 years and 11 months since April 2012 (53.3). China's manufacturing PMI, which had been sluggish due to the zero-COVID policy last year, surpassed the baseline at 50.1 in January, returning to expansion territory for the first time in four months since September 2022. The non-manufacturing (services) PMI also exceeded both the previous month and forecasts at 56.3.

However, despite improvements in Chinese data and reopening hopes, stock price gains remain limited. This is due to continued tightening concerns from central banks worldwide, following the U.S., as high inflation pressures have been confirmed in Europe as well. This has led to rising Treasury yields, which weigh on the stock market.

Following Spain and France, Germany's preliminary February Harmonized Index of Consumer Prices (HICP) rose 1.0% month-over-month and 9.3% year-over-year. These figures are higher than both the previous month and market expectations. The Wall Street Journal (WSJ) reported, "Investors are becoming convinced that the European Central Bank (ECB) will need to raise rates more aggressively to curb inflation," noting that Eurozone government bond yields have been rising since the market opened. The 10-year German government bond yield is currently trading around 2.71%.

In the New York bond market, Treasury yields continue to rise. The 10-year U.S. Treasury yield is trading near 3.95%, approaching 4%.

According to the Chicago Mercantile Exchange (CME) FedWatch tool, the probability of a 0.5 percentage point rate hike (big step) in March has risen to the 30% range in the federal funds (FF) futures market. The chance of a 0.25 percentage point increase at the March meeting is 69.4%, while the chance of a 0.50 percentage point increase is 30.6%. Although a 0.25 percentage point hike remains the consensus, this indicates heightened market concerns about tightening.

The S&P Global U.S. manufacturing Purchasing Managers' Index (PMI) for February, released shortly after the New York market opened, came in at 47.3, below the market forecast of 47.8. It has remained below the 50 baseline for four consecutive months, indicating continued contraction. The Institute for Supply Management (ISM) reported a February manufacturing PMI of 47.7.

Corporate earnings announcements are ongoing. After the market close today, Salesforce and Okta will release their results. Tesla will also hold its Investor Day event at its factory near Austin, Texas, this afternoon.

European stock markets are showing gains. Germany's DAX index rose 0.23%, the UK's FTSE index gained 0.81%, and France's CAC index moved up 0.29%.

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