Editor's PiCK
Three Major Indices Close Lower…Rate Cut Uncertainty Weighs [New York Stock Briefing]
Summary
- It was reported that the three major indices on the New York Stock Exchange closed lower amid uncertainty over a rate cut in September.
- Fed Chair Jerome Powell emphasized caution regarding the timing and pace of a rate cut, which dampened market expectations.
- While NVIDIA and some tech stocks rose ahead of earnings releases, major stocks such as Microsoft Corporation and Intel Corporation were on a downward trend.
The three major indices on the New York Stock Exchange all fell amid caution that a U.S. rate cut in September is not guaranteed.
On the 25th (local time), at the New York Stock Exchange, the Dow Jones Industrial Average closed at 45,282.47, down 0.77% from the previous session. The large-cap benchmark S&P dropped 0.43% to 6,439.32, while the tech-focused NASDAQ Composite Index closed at 21,449.29, down 0.22%.
It is interpreted that a cooling in expectations for the Fed rate cut affected the market. Fed Chair Jerome Powell hinted at the possibility of a rate cut at the Jackson Hole annual symposium on the 22nd, but emphasized caution regarding the timing and pace of the move. Accordingly, some market participants now expect the rate cut this year could be smaller than anticipated.
Former Federal Reserve Bank of Boston President Eric Rosengren told MarketWatch, "I don’t think Chair Powell promised a rate cut in September," adding, "The Fed can only lower rates if the data continue in the current direction."
According to FedWatch of the Chicago Mercantile Exchange (CME), the interest rate futures market sees an 82.8% probability that the Fed will cut rates at the Federal Open Market Committee (FOMC) meeting this September. This probability was adjusted downward from over 90% right after Powell's remarks.
Regarding individual stocks, NVIDIA, ahead of its earnings release, climbed 1.02% on strong earnings expectations. Alphabet (up 1.16%) and Tesla (up 1.94%) also rose.
Apple fell by 0.26%. Microsoft Corporation (-0.59%), Amazon.com, Inc. (-0.39%), and Meta Platforms, Inc. (-0.20%) also ended lower.
Intel Corporation dropped more than 1%. On this day, Intel disclosed that the 10% stake held by the Trump administration could "lead to risks across its business operations."
Yields on government bonds rose. The yield on the 10-year Treasury, which serves as a global benchmark, increased by 1.6bp (1bp = 0.01% points) to 4.276%. The 2-year Treasury yield, sensitive to Fed policy, rose 3.5bp to 3.724%.
Jungdong Noh, Korea Economic Daily dong2@hankyung.com
Korea Economic Daily
hankyung@bloomingbit.ioThe Korea Economic Daily Global is a digital media where latest news on Korean companies, industries, and financial markets.
