Nasdaq Closes Strong... Dow Falls
Gold, Silver, Grains and Other Commodities Plunge Together
Bitcoin Also Weakens
[Asia Economy New York=Correspondent Baek Jong-min] Despite the U.S. Federal Reserve's (Fed) announcement of an interest rate hike, the stock and bond markets remained relatively stable, but the commodity market collapsed. Cryptocurrencies also failed to avoid declines.
On the 17th (local time), the Dow Jones Industrial Average fell 210.22 points (0.62%) to close at 33,823.45, the S&P 500 index dropped 1.84 points (0.04%) to 4,221.86, and the Nasdaq index rose 121.67 points (0.87%) to finish at 14,161.35.
Although the Fed hinted at the possibility of the first rate hike in 2023 the previous day, the major New York stock indices did not plunge on this day. Rather, the Nasdaq, which is expected to be negatively affected by rising interest rates, showed strength.
The 10-year U.S. Treasury yield had risen to 1.55% the day before but reversed course and fell back to the 1.51% range on this day. While bond yields slightly declined, the dollar index rose by 0.7%.
Apple, which had shown strength the previous day, rose another 1.2% on this day. Tesla's stock also increased by 1.9%. CureVac, whose COVID-19 vaccine efficacy was below expectations, plunged by 39%.
The announcement of the rate hike did not impact the financial markets but instead caused a crash in commodity prices. The commodity market appears to have been directly hit by the Fed's rate hike announcement following China's intervention in the metal market. When the dollar rises due to expectations of rate hikes, commodity prices come under downward pressure.
August delivery gold fell sharply by 4.7% ($86.60) to close at $1,774.80 per ounce. Gold prices attempted to break through $1,900 earlier this month but recently showed weakness and on this day fell below the $1,800 level without resistance.
Silver prices plunged even more than gold, closing down 7% at $25.86. Copper for July delivery on the London Metal Exchange closed down 4.7% at $4.18 per pound.
Besides metals, corn futures fell 4% on this day, soybeans dropped 8%, and wheat declined 3%. Pork and beef futures also failed to avoid weakness.
Crude oil prices, which had been soaring, also closed slightly lower. July delivery West Texas Intermediate (WTI) crude oil fell 1.5% ($1.11) to close at $71.04 per barrel.
As commodities plunged, mining stocks and related industrial stocks also saw widespread declines.
Cryptocurrencies were also weak. Bitcoin fell 2.5% to the $37,700 range, Ethereum dropped 2.4% to the $2,340 range, and Dogecoin declined 1.2%, trading around 30 cents.
MarketWatch reported that the Fed's rate hike announcement also dragged down cryptocurrency prices.
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