[Asia Economy New York=Correspondent Baek Jong-min] The New York stock market closed higher for the second consecutive day despite the release of the May Consumer Price Index (CPI). The S&P 500 index once again hit an all-time high. As inflation concerns eased, the resurgence of previously subdued technology stocks stood out.
On the 11th (local time), the Dow Jones Industrial Average rose 13.36 points (0.04%) to close at 34,479.60, the S&P 500 index increased by 8.26 points (0.19%) to 4,247.44, and the Nasdaq index gained 49.09 points (0.35%) to finish at 14,069.42.
On a weekly basis, the Dow fell 0.8%, the S&P 500 rose 0.4%, and the Nasdaq climbed 1.8%.
Although the May CPI released the previous day showed a 5% increase, the market focused on the perception that the inflation rise is temporary. Since it was an expected event, there was widespread anticipation that the Federal Reserve's monetary policy would not be significantly affected.
A representative example is the plunge of the "VIX," known as the fear index. The VIX recorded 15.65 on the day, the lowest level this year. The decline in the VIX reflects a reduced likelihood of a sharp market drop.
Investment bank Jefferies forecasted, "Fed Chair Powell is expected to say at next week's FOMC meeting that tapering needs to be discussed in upcoming meetings, but it is unlikely to be implemented immediately."
The U.S. 10-year Treasury yield also fell again to 1.45 percentage points. During the session, it dropped as low as 1.42%, highlighting strong bond buying. A decline in Treasury yields means a rise in bond prices.
However, there are concerns that the simultaneous strength of stocks and bonds could change at any time. JP Morgan reported that the correlation between the iShares 20+ Year Treasury Bond ETF, which tracks Treasury yields, and the Nasdaq 100 index has surged to the highest level in 15 years.
Edward Park, Chief Investment Officer at Brooks Macdonald, stated, "Inflation remains a significant risk. There is still a risk that the Fed may say something different from market expectations."
The decline in U.S. Treasury yields led the rally in technology stocks. Expectations are emerging that technology stocks, rather than recently strong cyclical stocks, will lead the market going forward.
A prime example is Zoom, a major beneficiary of COVID-19. Zoom surged 5% on the day and has risen 25% over the past month.
Apple rose 1%, but Amazon fell 0.08% amid concerns over a corporate breakup bill.
Tesla's stock closed slightly lower, but Chinese electric vehicle maker Nio surged over 6% on expectations of entering the European market and the announcement of a low-priced sub-brand model.
Meme stocks were strong. GameStop, which had plunged more than 30% the previous day, rose over 5%, AMC Entertainment's stock increased more than 15%, and Clover Health's shares gained over 4%.
Cryptocurrencies were mostly weak except for Bitcoin. Bitcoin traded around $37,600, up 0.7% from 24 hours earlier. Ethereum fell 5% to the $2,340 range, and Dogecoin dropped 2.5% to 31 cents.
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