(New York = Yonhap News) Oh Jin-woo, correspondent for Yonhap Infomax = Major indices in the New York Stock Market fell sharply. Fed chairman Jerome Powell’s disappointment over the comments was impacted by the rise in US Treasury yields.
On the 4th (Eastern Time), the Dow Jones 30 Industrial Average on the New York Stock Exchange (NYSE) closed at 30,924.14, down 345.95 points (1.11%) from the battlefield.
The Standard & Poor’s (S&P) 500 index fell 51.25 points (1.34%) from the battlefield to 3,768.47, while the technology stock-oriented NASDAQ index fell 274.28 points (2.11%) to 12,723.47.
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Nasdaq turned downward on an annual basis this year. In addition, in terms of intraday prices, it once fell by more than 10% from the recent high, falling into a correction market.
The market was keenly aware of Chairman Powell’s remarks and interest rate trends in the US Treasury.
In a talk with the Wall Street Journal on the same day, Chairman Powell repeated his view that he would maintain easing monetary policy for a considerable period of time, but failed to ease market concerns over rising interest rates.
He only said that it “catches the eye” of the recent increase in government bond yields.
It did not give any hints about introducing policies to help curb interest rate hikes, such as an operation twist to sell short-term bonds and buy long-term bonds or extend bank capital deregulation. The market expected that Chairman Powell would present such a policy possibility.
He said that although he would be concerned about the disorderly flow of financial markets or continued tightening, financial market conditions were still easing.
In addition, CNBC said that the resumption of the economy could temporarily increase inflation pressure, which made investors uneasy, CNBC said.
After Chairman Powell’s talks, the 10-year US Treasury bond yield surged to the mid-1.5% range.
As interest rates rose, stock market anxiety intensified, centering on technology stocks. The NASDAQ crashed more than 3% at one time during the day. The Dow index was also pushed more than 700 points compared to the battlefield.
The U.S. employment-related indicators released on the day were not bad, but they did not offset the anxiety caused by rising interest rates.
The Ministry of Labor announced last week that the number of unemployment insurance claims increased by 9,000 from the previous week to 745,000 (seasonally adjusted). Although it increased slightly from the previous week, it was less than the 750,000 estimates compiled by the Wall Street Journal.
Challenger, Gray and Christmas (CG&C) announced that its plans to cut jobs in February fell 57 percent from the previous month to 34,531 people. It is the smallest since December 2019, with 32,843 people.
The US$1.9 trillion stimulus plan is in progress without much friction, with the debate being initiated in the Senate. In addition, there were favorable factors in the stock market, such as a surge in international oil prices as OPEC+ (Oil Exporting Countries Organization and major oil producing countries such as Russia) decided to almost freeze production in April, contrary to expectations.
However, it did not provide much support as market participants’ attention was focused on interest rates.
Additional stimulus measures and rising oil prices are also factors fueling inflation concerns.
On this day, technology stocks fell 2.26% by industry, and financial stocks fell 1.21%. On the other hand, energy rose by 2.47%.
Other economic indicators released that day were also good.
The Ministry of Commerce announced that in January, orders for factory materials increased 2.6%. This was more than the 2.3% increase in the market forecast.
The correction for non-agricultural productivity in the fourth quarter of last year announced by the Ministry of Labor was also raised to a decrease of 4.2% (seasonal adjustment) from the previous quarter. The preliminary value announced earlier was down 4.8%. It was better than the 4.7% decline in the market outlook.
New York stock market experts assessed that anxiety could persist due to Chairman Powell’s vague remarks.
“The uncertain mayor received an uncertain message,” said Michael Farr, CEO of Farr, Miller and Washington. “(Chairman Powell’s remarks) was a repetition of keeping an eye on.”
According to the Chicago Merchandise Exchange (CME) Fed Watch, the FF interest rate futures market reflects the possibility of a 25bp base rate hike in September by 4.1%.
On the Chicago Options Exchange (CBOE), the volatility index (VIX) was 28.57, up 7.12% from the previous trading day.
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2021/03/05 06:42 sent