Volatility Expands Ahead of Reciprocal Tariff Announcement… Nasdaq Up 0.87% [New York Stock Market Briefing]

In the New York stock market, major indices closed mixed as volatility increased ahead of U.S. President Donald Trump's reciprocal tariff announcement. This was due to the intersection of anxiety related to tariffs and expectations that the economic slowdown caused by tariff imposition could lead to a rate cut by the U.S. Federal Reserve (Fed).

On the 1st (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 41,989.96, down 11.80 points (0.03%) from the previous day, the Standard & Poor's (S&P) 500 Index rose 21.22 points (0.38%) to 5,633.07, and the tech-heavy Nasdaq Composite Index ended at 17,449.89, up 150.60 points (0.87%).

Anxiety over reciprocal tariffs and a slowdown in economic indicators weighed on the indices early in the session.

The White House announced that President Trump would announce reciprocal tariffs as scheduled at 4 p.m. on the 2nd in the Rose Garden of the White House and that they would take effect immediately.

The March Manufacturing Purchasing Managers' Index (PMI) announced by the Institute for Supply Management (ISM) was 49.0, below both the market expectation (49.5) and the previous month's figure (50.3). The manufacturing sector turned back into contraction (below 50) for the first time in three months, weakening expectations for economic recovery.

The U.S. Department of Labor announced that the number of job openings in February was about 7.57 million, below the market expectation (7.63 million). It decreased by about 200,000 from the previous month (7.76 million) and by about 877,000 from the same period last year (8.45 million), signaling a cooling labor market.

The Atlanta Federal Reserve's 'GDP Now' model, which estimates U.S. economic growth in real-time, also lowered its first-quarter growth forecast to an annualized rate of -3.7% compared to the previous quarter.

As the possibility of an economic slowdown becomes more pronounced, market expectations for a Fed rate cut are rising.

According to the FedWatch tool of the Chicago Mercantile Exchange Group (CME Group), as of the close of trading on this day, the probability that the Fed will cut the benchmark interest rate by more than 25 basis points (1bp=0.01%) in the first half of this year increased by 3.1 percentage points to 77.4% compared to the previous day.

The possibility of more than two cuts (each 25bp) within the year is 92.5%, and the possibility of more than three cuts is 70.6%, with the probability of more than three cuts reflecting an increase of 4.4 percentage points compared to the previous day.

This is favorable for tech stocks.

All stocks in the large tech group 'Magnificent 7' (M7) closed with strong gains on this day. Nvidia rose 1.63%, Microsoft 1.81%, Apple 0.48%, Alphabet, Google's parent company, 1.57%, Tesla 3.59%, Amazon 1%, and Facebook's parent company 1.67%.

The pro-Trump cable news channel Newsmax continues to surge as it debuted on the New York Stock Exchange. It rose 735% on the day of listing and jumped another 179.01% on this day to record $233. The public offering price was $10.

Remote healthcare service company Hims & Hers announced plans to sell Eli Lilly's obesity treatments ZepBound and Mounjaro on its platform, causing its stock to jump 5.08%.

Johnson & Johnson (J&J) fell 7.59%. This was due to the failure of an attempt to resolve thousands of consumer lawsuits related to talc, which caused cancer controversy, through a Chapter 11 bankruptcy protection filing.

Southwest Airlines also fell 5.93%. This was due to investment bank Jefferies lowering its investment rating on Southwest Airlines from 'Hold' to 'Underperform'. Jefferies also downgraded its investment ratings on American Airlines and Delta Air Lines from 'Buy' to 'Hold'. As a result, Delta Air Lines fell 2.71% and American Airlines 2.37%.

By sector, among the 11 sectors that make up the S&P 500, 9 sectors rose, including Consumer Discretionary (1.14%), Consumer Staples (0.28%), Energy (0.58%), Industrials (0.6%), Materials (0.32%), Real Estate (0.09%), Technology (0.95%), Communication Services (1.02%), and Utilities (0.3%), while 2 sectors, Financials (0.16%) and Healthcare (1.75%), fell.

The rise in consumer discretionary stocks and the decline in healthcare were notable.

On this day, the Volatility Index (VIX) compiled by the Chicago Board Options Exchange (CBOE) indicated 21.77, down 0.51 points (2.29%) from the previous session.

Han Kyung-woo, Hankyung.com Reporter case@hankyung.com