[New York Stock Market] Late Session Plunge, Broad Decline... S&P Falls Below 4500

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] The US New York stock market, unable to shake off fears of early tightening, closed lower across the board on the 20th (local time). Although there were expectations of a rebound with early gains, these were ultimately given back by the end of the session. The weakness of tech stocks was particularly notable.

On this day, the Dow Jones Industrial Average closed at 34,715.39, down 313.26 points (0.89%) from the previous session. The S&P 500 index ended the day at 4,482.73, down 50.03 points (1.10%). This marks the first time since October 2021 that the S&P 500 has fallen below the 4,500 level.

The tech-heavy Nasdaq index fell 186.23 points (1.30%) to 14,154.02. The previous day, the Nasdaq had already entered a technical correction phase, dropping more than 10% from its November high last year.

Despite weak employment data, the New York stock market showed early gains during the session. The Nasdaq at one point in the morning session recorded gains of over 2%. However, the market, which started with optimism, turned downward as concerns about interest rate hikes and early tightening by the US Federal Reserve (Fed) resurfaced. Bespoke Investment Group reported, "The New York stock market rebounded until lunchtime, but selling pressure became prominent in the latter part of the session."

By individual stocks, the weakness of tech stocks, which are highly sensitive to interest rates, was reaffirmed. Tesla barely managed a 0.06% gain from the previous close, failing to regain its 'CheonTesla' status. Shares of Nvidia (-3.66%), Apple (-1.03%), Microsoft (-0.57%), Meta (-0.95%), and Amazon.com (-2.96%) also retreated. Netflix, which is scheduled to announce earnings shortly after the market close, fell 1.48% from the previous session.

Peloton plunged more than 20% intraday after news broke that it would temporarily halt fitness product production for two months starting February.

The market could not shake off concerns about early tightening. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street’s fear gauge, rose 1.77 points (7.63%) to 25.66 from the previous session. Ryan Detrick of LPL Financial warned, "Investors need to be prepared for 2022 to be much more challenging," adding, "As interest rate hikes approach, more abrupt ups and downs may occur."

Employment data released before the market open was also weak. According to the US Department of Labor, new unemployment claims for the week of January 9-15 totaled 286,000, exceeding market expectations. This is the highest level of unemployment claims in three months since October last year. Experts interpret this as a sign that economic recovery may slow due to the spread of the Omicron variant. Existing home sales in December also plunged 7.1% compared to the same month last year.

Kathy Bostianic, Chief Economist at Oxford Economics, said, "We are facing a situation of high market volatility as uncertainty deepens around the economy, inflation, and interest rate outlooks."

International crude oil prices declined as weekly crude inventories increased. On the New York Mercantile Exchange (NYMEX), February West Texas Intermediate (WTI) crude closed at $86.90 per barrel, down $0.06 (0.1%) from the previous trading day. March WTI for delivery fell $0.25 (0.3%) to $85.55 per barrel.