[New York Stock Market] US Treasury Yields Surge, Stocks Plunge... Nasdaq Down 2.60%

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] The three major indices of the U.S. New York stock market all plunged on the 18th (local time) due to a sharp rise in U.S. Treasury yields and disappointing financial sector earnings.

On that day, the Dow Jones Industrial Average closed at 35,368.47, down 543.34 points (1.51%) from the previous session. The S&P 500 index ended the day at 4,577.11, down 85.74 points (1.84%).

The tech-heavy Nasdaq index fell 386.86 points (2.60%) to 14,506.90. This is the lowest level in the past three months. Compared to its peak, it dropped more than 10%, falling below the 200-day moving average for the first time since April 2020. The Russell 2000, which focuses on small-cap stocks, also showed a decline of 3.1%.

On this day, the New York stock market fell across the board amid growing concerns that the U.S. Federal Reserve (Fed) would accelerate early tightening. In particular, the U.S. Treasury yield hit its highest level in two years, delivering a direct blow to the stock market, especially the IT sector.

By individual stocks, Tesla closed down 1.82%. Meta (formerly Facebook) and Amazon also showed declines of around 4% and 2%, respectively. Jack Janasiewicz, portfolio manager at Natixis Investment, said, "We are seeing liquidity withdraw, and this is scaring the market." Ross Mayfield, investment strategy analyst at Baird Private Wealth Management, also said, "Uncertainty about the timing and pace of the Fed's rate hikes will make the market uneasy in the first half of this year."

Financial sector earnings released that day were also below expectations. Goldman Sachs, which reported earnings below market expectations, fell about 7% from the previous session, leading the overall Dow index decline. Another financial company, Charles Schwab, also reported earnings per share (EPS) of $0.86, below market expectations.

Meanwhile, after Microsoft (MS) announced it would acquire game developer Activision Blizzard (Blizzard) for about $68.7 billion (approximately 82 trillion won), Blizzard's stock surged 25.9%, while MS's stock slipped 2.4%.

In the New York bond market, the U.S. 10-year Treasury yield briefly surged to 1.866%, the highest level since January 2020. The 2-year yield, sensitive to monetary policy, also entered the 1% range for the first time since February 2020, just before the COVID-19 pandemic.

International oil prices hit their highest level in about seven years due to concerns over geopolitical tensions in the Middle East.

On that day at the New York Mercantile Exchange (NYMEX), the February West Texas Intermediate (WTI) crude oil price closed at $85.43 per barrel, up $1.61 (1.92%) from the previous session. This is the highest since October 13, 2014. Brent crude on the London ICE Futures Exchange also traded at $87.90 per barrel, up 0.4% from the previous day, marking the highest level since October 2014.

This was due to the Houthi rebels in Yemen, allied with Iran, attacking the international airport and oil facilities in Abu Dhabi, United Arab Emirates (UAE), with drones, heightening geopolitical concerns in the Middle East. Bloomberg News reported, "The attack by Yemeni rebels has further increased geopolitical risk concerns over supply disruptions." The UAE is the world's eighth-largest oil producer.