US Treasury Yields Soar with Sky-High Ceiling... New York Stock Market Devastated (Comprehensive)

[Image source=Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] The New York stock market once again fell sharply, unable to overcome the impact of the rapid rise in U.S. Treasury yields.

On the 25th (local time), the Dow Jones Industrial Average fell 559.85 points (1.75%) to close at 31,402.01, the S&P 500 index plunged 96.09 points (2.45%) to 3,829.34, and the Nasdaq index dropped 478.54 points (3.52%) to finish at 13,119.43.

Despite inflation concerns, the Dow, which had shown strength on expectations of economic recovery, also plunged, and the Nasdaq, which is directly affected by rising interest rates, recorded its largest one-day decline since late October last year.

Contrary to the market decline, the VIX, known as the fear index, surged by 35%.

On that day, U.S. Treasury yields rose sharply even before the market opened, putting pressure on the market. In the afternoon, news broke that the Treasury's bond auction results were poor, and Treasury yields jumped to 1.6% during the session.

Afterwards, the major indices of the New York stock market drew a steep downward curve without resistance. The yields, which rose above the average dividend yield of S&P 500 constituent stocks, strongly pressured risk asset investment sentiment.

Most stocks and sectors fell indiscriminately. Technology stocks overall were weak, with Apple down 3.5% and Tesla down 7.5%.

Bank stocks, which benefit from rising interest rates, as well as Boeing, which surged the previous day on expectations of economic recovery, also plunged 5.6%.

The rapid rise in Treasury yields also pushed gold prices down weakly. On that day, gold prices showed a bearish trend, falling 2.2% during the session.

Although Federal Reserve Chairman Jerome Powell mentioned that it would take more than three years to achieve the inflation target, the market did not take this at face value.

The strong employment data released that day also fueled inflation expectations. The U.S. Department of Labor announced that initial jobless claims last week decreased by 111,000 from the previous week to 730,000. This result was far below the Dow Jones consensus estimate of 845,000 and was perceived as a sign of economic recovery.

The U.S. fourth-quarter growth rate for last year was also revised upward to 4.1%, up 0.1 percentage points from the preliminary figure of 4.0%. January durable goods orders also soared to 3.4%, far exceeding the market expectation of a 1.0% increase.