Market on edge ahead of FOMC… US three major indices diverge [New York Stock Market Briefing]

FOMC 9~10 held…0.25% point cut expected

"Jerome Powell, Fed Chair's remarks are important"

The three major New York stock indices closed mixed. This is interpreted as heightened caution ahead of the US Federal Open Market Committee (FOMC).

On the 9th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 47,560.29, down 179.03 points (0.38%) from the previous close. The Standard & Poor's (S&P) 500 index closed at 6,840.51, down 6 points (0.09%), and the Nasdaq index closed at 23,576.49, up 30.58 points (0.13%).

From today, the FOMC will begin a two-day meeting. With the US central bank (Fed) expected to cut the policy rate by 0.25% point, the market has already priced in a rate cut and is focusing on the path of rates next year. The FOMC will release the Summary of Economic Projections (SEP) and the dot plot at this meeting.

Brett Kenwell, US investment analyst at trading platform eToro, said, "For now a rate cut is almost certain, but the Fed's economic outlook and remarks by Jerome Powell, Fed Chair, will have a big impact on the market," adding, "They could determine the market's flow not only this week but for the remainder of the month."

With continued expectations of a rate cut, the Russell 2000 index, which is concentrated in small- and mid-cap stocks, rose 0.21% from the previous day. Lower rates tend to reduce borrowing costs for smaller companies.

Among big tech companies with market caps over $1 trillion, NVIDIA, Apple, and Meta fell around 1%. In contrast, Broadcom, Alphabet, Tesla, Microsoft, and Amazon rose about 1%. Walmart, which moved its listing from the New York Stock Exchange to Nasdaq, fell 1.35%.

In October's US Job Openings and Labor Turnover Survey (JOLTS), job openings exceeded market expectations, but layoffs also increased. According to the Department of Labor, seasonally adjusted job openings were 7.67 million, above the market expectation of 7.2 million.

There was almost no change compared with September's figure of 7.66 million, and it was up by more than 400,000 compared with the revised August figure of 7.22 million. However, involuntary separations such as layoffs and discharges also totaled 1.85 million in October, an increase of 120,000 from August's 1.73 million.

Private employment improved. According to private employment data firm ADP, for the four weeks ending on the 22nd of last month, the US preliminary private employment measure increased by an average of 4,750 per week.

According to the CME FedWatch tool, federal funds rate futures are pricing in the highest likelihood that the number of rate cuts will be limited to one (25bp) at least through April next year. The probability of a 25bp rate cut in December is still being priced in at the high-80% range.

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) was up 0.27 points (1.62%) from the previous close, at 16.93.

Jin Young-gi, Hankyung.com reporter young71@hankyung.com