[New York Close] Caution Over Fed Interest Rate Cut Expectations

[Asia Economy New York=Correspondent Baek Jong-min] The New York stock market showed weakness as concerns over the novel coronavirus (COVID-19) and expectations of a Federal Reserve (Fed) interest rate cut overlapped.

On the 20th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average fell 128.05 points (0.44%) from the previous session to close at 29,219.98, the S&P 500 index dropped 12.92 points (0.38%) to 3,373.23, and the Nasdaq declined 66.21 points (0.67%) to finish at 9,750.96.

COVID-19 cases rapidly increased outside China, including in Korea and Japan, with deaths occurring, causing overall investor sentiment to become uneasy.

In particular, when China's state-run media Global Times reported that confirmed cases at a Beijing hospital surged significantly, heightening the sense of crisis, major indices showed a sharp decline in a short period and failed to recover the losses.

On the same day, remarks by Federal Reserve Vice Chair Richard Clarida, which contradicted market expectations for an interest rate cut, also affected investor sentiment.

Vice Chair Clarida stated, "Although the interest rate futures market reflects expectations of a rate cut this year, there is skepticism about whether market participants truly anticipate a rate cut."

The U.S. economic indicators released that day were favorable. According to the Philadelphia Federal Reserve, the Philadelphia Fed Index for February surged from 17.0 in the previous month to 36.7, significantly exceeding the expert forecast of 8.0 compiled by The Wall Street Journal.

The U.S. Department of Labor announced that the number of initial jobless claims last week increased by 4,000 from the previous week to 210,000 (seasonally adjusted), matching market expectations of 210,000.

By stock, E*TRADE, which was decided to be acquired by Morgan Stanley, saw its stock price surge about 22%.

International oil prices continued their upward trend. On the same day at the New York Mercantile Exchange (NYMEX), March delivery West Texas Intermediate (WTI) crude oil closed at $53.78 per barrel, up 0.9% ($0.49) from the previous day. Gold prices also showed strength, with April delivery gold rising 0.5% ($8.70) to $1,620.50 per ounce compared to the previous day.