Government Bond Yields Fall as Tech Stocks Also Rally
[Asia Economy New York=Correspondent Baek Jong-min] The New York stock market surged on expectations that the U.S. economy is recovering from the damage caused by the novel coronavirus infection (COVID-19). Sharp improvements in employment and retail sales indicators stimulated investor sentiment, pushing the Dow Jones Industrial Average past the 34,000 mark for the first time ever.
On the 15th (local time), the Dow Jones Industrial Average closed at 34,035.99, up 305.10 points (0.90%). This is the first time the Dow has surpassed the 34,000 level.
The S&P 500 index rose 45.76 points (1.11%) to 4,170.42, and the Nasdaq index closed at 14,038.76, up 180.92 points (1.31%).
On this day, the New York stock market saw broad gains across both cyclical stocks and technology stocks, reflecting expectations of economic recovery.
The employment and retail indicators released that day sharply reversed the market mood. Retail sales for March, announced before the market opened, surged 9.8% compared to the previous month. New claims for unemployment benefits dropped sharply by 193,000 in one week to 576,000. Both indicators far exceeded market expectations with surprising results.
The situation where new unemployment claims increased and retail sales decreased between February and March turned into a rapid recovery amid expanded vaccine rollouts, milder weather, and the U.S. government's $1,400 cash payment policy.
Increased consumption led to a simultaneous rise in employment, creating a positive feedback effect.
CNBC reported that the strong economic indicators drove the Dow Jones to the 34,000 level. Ryan Detrick, Chief Market Strategist at LPL Financial, explained, "The speed and resilience of the economic recovery are unlike anything we've seen before and justify the current stock market situation."
Despite the economic recovery, U.S. Treasury yields fell, supporting gains in technology stocks. The 10-year U.S. Treasury yield dropped to 1.56% that day. Concerns about rising inflation had pushed yields up to 1.7%, but the situation reversed.
Along with the decline in Treasury yields, so-called FANG stocks?Apple, Facebook, Amazon, Netflix, and Alphabet?all rose more than 1%.
The market has been concerned that the U.S. government's large-scale infrastructure investment and stimulus measures, combined with economic recovery, would increase inflation and cause Treasury yields to surge.
The cryptocurrency exchange Coinbase, which was listed the day before, fell by over 1%, failing to continue its two-day winning streak.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
