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New York Stock Exchange. Photo = AFP Yonhap News The New York stock market fell all at once due to a mix of the desire to realize profits from the ‘Trump trade’ that has led the market recently and uncertainty about the policies of the US Central Bank (Fed).
On the 15th (US Eastern time) at the New York Stock Exchange, the Dow Jones Industrial Average closed trading at 43,444.99, down 305.87 points (0.70%) from the previous trading day. The Standard & Poor’s (S&P) 500 index closed at 5,870.62, down 78.55 points (1.32%) from the previous day, and the Nasdaq Composite Index closed at 18,680.12, down 427.53 points (2.24%).
The stock market appears to have plummeted due to a combination of a stronger desire to realize profits from the Trump trade and anxiety that the Federal Reserve’s policy path has become uncertain. The aftershocks of policy uncertainty triggered by U.S. Central Bank Chairman Jerome Powell the previous day appear to have continued today as well.
The day before, Chairman Powell focused on inflation and suggested adjusting the pace of interest rate cuts. Federal Reserve doctors also joined the cautious stance in response to these remarks. “I’m certainly not taking the possibility of a December rate cut off the table,” Susan Collins, president of the Federal Reserve Bank of Boston, said. “We’re not on a predetermined path, so we have to look at the data carefully.”
Austin Goolsbee, President of the Chicago Fed, also said in an interview with foreign media, “As long as inflation shows progress toward our 2% target over the next 12 to 18 months, the benchmark interest rate will be lower than it is now.” “If they can’t match it, it would be reasonable to start slowing down the pace of interest rate cuts,” he said.
According to the Chicago Mercantile Exchange (CME) FedWatch tool, the probability that the benchmark interest rate will be frozen in December in the federal funds rate futures market is around 42% by the end of the day. Compared to 27.8% at the close of the market the previous day, it jumped by 14 percentage points.
The bet that the base interest rate cut will be only 25 basis points by June next year also rose from 17.7% at the previous day’s close to 20.2%. The probability that it would be less than 50bp reached 55%.
Among the seven giant technology companies, only Tesla rose by more than 3%, but all fell. Amazon and Metaplatforms fell more than 4%. Alphabet, Apple, and Microsoft also fell behind by around 2%. NVIDIA fell 3.26%, barely retaining its top spot in market capitalization.
NVIDIA was caught up in the market trend as semiconductor and artificial intelligence (AI)-related stocks plummeted one after another. The Philadelphia Semiconductor Index plunged 3.42%, reflecting anxiety about the Trump regime. All 30 stocks that make up the Philadelphia Index fell. There were also significant falls, including TSMC (-1.32%), Broadcom (-3.25%), ASML (-4.95%), AMD (-2.84%), and Qualcomm (-2.12%). Applied Materials plunged more than 9%.
Medical and pharmaceutical stocks also fell sharply as Trump nominated Robert F. Kennedy Jr., a member of the Kennedy family, a symbol of the U.S. Democratic Party, as Secretary of Health and Human Services. Kennedy Jr. is a vaccine skeptic and has been critical of federal health agencies.
By industry, all industries except finance, real estate, and utilities fell. Consumer discretionary goods, medical pharmaceuticals, and telecommunications services fell more than 1%, and the technology sector plunged more than 2%.
The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) recorded 16.14, up 1.83 points (12.79%) from the previous day.
Shin Yong-hyun, Hankyung.com reporter [email protected]
