New York Stock Exchange Plummets on Powell's Remarks... US 10-Year Treasury Yield Surges Past 4.5% [Fed Watch]

Dow Jones Falls for 10 Consecutive Days

S&P500 Drops 178.54 Points (2.95%) to 5,872.16

The Federal Reserve (Fed) adjusted the benchmark interest rate to 4.25~4.50% at the December Federal Open Market Committee (FOMC) meeting held on the 18th (local time), lowering it by 0.25 percentage points, yet the New York Stock Exchange plummeted that day.

This was due to the Summary of Economic Projections (SEP) released by the Fed, which raised the year-end benchmark interest rate forecast for next year from 3.4% in September to 3.9%. Chairman Powell also hinted at being more cautious about further rate cuts.

The New York Stock Exchange closed sharply lower that day on the prospect that the pace of additional rate cuts by the Fed would slow down.

The Dow Jones Industrial Average, a group of blue-chip stocks, fell 1,123.03 points (2.58%) to 42,326.87 compared to the previous session.

In the early session, it seemed to rebound, breaking a 9-day losing streak, but after the monetary policy meeting results were announced, it changed direction and fell for 10 consecutive days. This is the longest losing streak since October 1974, when it fell for 11 consecutive days.

The large-cap benchmark S&P500 index fell 178.54 points (2.95%) to 5,872.16, and the tech-heavy Nasdaq Composite index closed at 19,392.69, down 716.37 points (3.56%).

As the Fed announced it would slowly lower rates starting next year, US Treasury yields surged to a six-month high. The 10-year US Treasury yield rose 11 basis points (1bp=0.01 percentage points) to 4.51% as of 4:20 PM on the 18th (local time), compared to the close of the New York Stock Exchange the previous day. This is the highest level in six months since early June.

New York=Park Shin-young, Correspondent nyusos@hankyung.com