New York Stock Markets Burden to Rise Interest Rates Despite Favorable US Consumption… S&P closes down 0.03%
(New York = Yonhap News) Correspondent Oh Jin-woo, Yonhap Infomax = In the New York stock market, major indexes showed mixed trend in the wary of rising government bond yields despite strong US consumption.
On the 17th (US time) on the New York Stock Exchange (NYSE), the Dow Jones 30 Industrial Average closed at 31,613.02, up 90.27 points (0.29%) from the battlefield.
The Standard & Poor’s (S&P) 500 index closed at 3,931.33, down 1.26 points (0.03%) from the battlefield, while the technology stock-oriented NASDAQ index closed at 13,965.49, down 82.00 points (0.58%).
The market watched key indicators such as consumption, trends in US Treasury yields, and the minutes of the Federal Open Market Committee (FOMC) in January.
It was found that US consumption at the beginning of the year improved significantly thanks to the government’s stimulus measures such as cash grants of $600 per person.
The Ministry of Commerce announced that in January, retail sales surged 5.3% from the previous month. Retail sales turned to increase in four months, far more than the 1.2% increase in the market forecast compiled by the Wall Street Journal (WSJ).
Consumption is the core support of the US economy. This means that the economy is maintaining strong support rather than concern.
Major indices showed a downtrend at the beginning of the market despite a good indicator. It was interpreted as the influence that strong consumption provoked concerns that could fuel inflation.
In particular, the production price index rose more than expected, further increasing the burden of rising interest rates.
The Ministry of Labor announced that the producer price index (PPI) in January rose 1.3% from the previous month. It rose a lot more than the 0.4% increase expected by experts, and recorded the largest increase since the commencement of inflation in December 2009.
According to consumption and inflation indicators, the 10-year US Treasury bond rate peaked above 1.33% at the beginning of the market.
There are many concerns that if interest rates continue to rise, the valuation burden on the stock price, centered on high-value technology stocks, will increase.
Accordingly, the stock prices of major technology companies such as Apple and Netflix have weakened. Apple’s share price fell by 1.8% and Netflix’s share price fell by 1.1%.
The major index, however, showed a rebound during the intraday, and the Dow index succeeded in turning upward.
The Dow Index was also affected by a surge in the stock prices of Verizon and Chevron, constituents of the index.
Berkshire Hathaway, led by investment virtuoso Warren Buffett, showed increased investments in these companies in the fourth quarter, so Verizon shares rose more than 5% and Chevron shares rose about 3%.
The Federal Reserve System (Fed and Fed) also supported the stock market by reaffirming its policy of continuing easing monetary policy.
According to the January FOMC minutes, the commissioners argued that the economic situation was still far from the Fed’s long-term goals, and that easing policies should be maintained until the goals are met.
Due to the Fed’s easing stance, the 10-year U.S. Treasury bond rate also fell below 1.3% in the second half of the market.
On this day, technology stocks fell 1.03% by industry, sluggish. Energy rose 1.45% and financial stocks rose 0.36% thanks to the continued rise in international oil prices.
Other economic indicators released that day were also good.
In January, the Fed announced that industrial production increased 0.9% (seasonal adjustment) from the previous month. It exceeded the market forecast of 0.5% increase.
According to the National Housing Construction Industry Association (NAHB)/Wells Fargo, the housing market index for February was 84, up from 83 in the previous month. It slightly exceeded the experts’ estimate of 83 degrees.
The Ministry of Commerce said that in December of last year, corporate inventories rose 0.6% over the previous year to $1.971 trillion. It was more than the 0.5% increase expected in the market.
Experts in New York’s stock market assessed that the position could be adjusted due to the increase in government bond yields.
Derek Halpenny, head of market research at MUFG, said, “With the rise in government bond rates, some investors are reassessing risky assets.”
“The stock has reached a level that is somewhat less attractive than expected,” he added. “This could lead to some position adjustments.”
On the Chicago Options Exchange (CBOE), the volatility index (VIX) recorded 21.50, up 0.19% from the previous trading day.
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