(New York = Yonhap News) Correspondent Oh Jin-woo of Yonhap Infomax = Major indices in the New York stock market showed mixed trends as technology stocks were hit by the rise in US Treasury yields.
On the 22nd (US time) on the New York Stock Exchange (NYSE), the Dow Jones 30 Industrial Average closed at 31,521.69, up 27.37 points (0.09%) from the battlefield.
The Standard & Poor’s (S&P) 500 index closed at 3,876.50, down 30.21 points (0.77%) from the battlefield, and the Nasdaq index centered on technology stocks fell 341.42 points (2.46%) to 13,533.05.
The market watched the trends in US Treasury yields, major economic indicators, and news related to the novel coronavirus infection (Corona 19).
As US interest rates continue to rise, technology stocks are putting a burden on the stock market.
The 10-year U.S. Treasury bond rate increased to around 1.39% at one time during the day. It has been on a steady rise from the highest level since February of last year. However, since then, the rise has slightly decreased to around 1.37%.
The difference in interest rates on 2-year government bonds and 10-year bonds widened to the maximum in about four years. Rising long-term interest rates and widening long- and short-term interest rate differences are considered representative signs of economic recovery.
However, it can be an anxiety factor in the stock market. The rise in procurement costs can pose a risk to high-growth technology companies that have been benefiting from low interest rates. In addition, the investment attractiveness of stocks versus bonds is halved.
The Federal Reserve (Fed and Fed) has repeatedly expressed its willingness to maintain easing monetary policy, but if interest rates continue to rise, market uncertainty over the possibility of the Fed tightening will inevitably increase.
Accordingly, in the recent stock market, concerns over rising interest rates, mainly technology stocks, are clear. On this day, Tesla’s share price plunged by more than 8.5% and Apple’s stock price fell close to 3%, leading to sluggishness of key technology companies.
On the other hand, the economic cycle, which is expected to benefit from economic recovery such as energy, is relatively strong.
Investors are keen to know what kind of diagnosis Fed Chair Jerome Powell will give about the rise in interest rates in the Senate anti-annual monetary policy testimony scheduled for the next day.
The European Central Bank’s (ECB) governor Christine Lagard said that he is “watching” the rise in long-term interest rates. Eurozone Treasury yields declined in response to President Lagard’s remarks.
Positive news came out regarding Corona 19.
British Prime Minister Boris Johnson announced plans to ease the blockade in stages, beginning with school attendance in early March. It is flexible depending on the Corona 19 situation, but plans to lift all regulations by the end of June, Johnson said.
German Chancellor Angela Merkel also reportedly insisted on the necessity of establishing a blockade mitigation plan.
The $1.9 trillion stimulus plan promoted by the US government is also progressing as scheduled. The US House of Representatives Budget Committee passed a stimulus bill that day. The Democratic Party plans to pass the bill in the House later this week.
On this day, by industry, energy rose by 3.47% due to a surge in international oil prices. Financial stocks rose 0.98% and industrial stocks rose 0.38%. On the other hand, technology stocks plunged 2.26%.
The economic indicators released that day were good.
The Federal Reserve Bank of Chicago (Yeon Eun) announced that the US activity index in January was 0.66, up from 0.41 the previous month. It was higher than the market forecast of 0.15 compiled by the fact set.
The conference board reported that the leading economic index for the US in January recorded 110.3, up 0.5% from the previous month. It exceeded the market forecast of 0.4%, compiled by the Wall Street Journal.
The Dallas Yan’s Business Activity Index for February was 17.2, a sharp rise from 7.0 last month. The market outlook was also far beyond 5.0.
New York stock market experts expressed concern over rising interest rates. However, some estimates that the situation is not excessively sensitive to interest rates.
Hani Redha, portfolio manager at Finebridge Investments, said, “If interest rates rise, there is more demand for government bonds compared to other assets. If interest rates are very low, you can invest more money in stocks, but interest rates rise.” When you start, things change,” he said.
On the other hand, Baird’s director Patrick Spencer said, “If US Treasury bonds are to be attractive compared to technology stocks, 10-year interest rates must rise by about 4% or more. The spread of vaccines and $1.9 trillion in stimulus will accelerate economic recovery and It will provide another upside power.”
He assessed that the rise in interest rates was due to the economic recovery.
On the Chicago Options Exchange (CBOE), the volatility index (VIX) was 23.45, up 6.35% from the previous trading day.
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2021/02/23 06:42 sent