[New York Stock Market] Powell's 'Hawkish' Remarks Cause Sudden Chill in Booming Market... Dow Down 0.38%

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] The U.S. New York stock market turned bearish on the 26th (local time) following Federal Reserve (Fed) Chairman Jerome Powell's announcement of a rate hike. Until just before Powell's press conference, the New York stock market had been showing an upward trend, but it sharply froze with his hawkish remarks. It is evaluated that investors' fears surrounding market uncertainty grew, resulting in a rollercoaster market for three consecutive trading days.

On this day, the Dow Jones Industrial Average closed at 34,168.09, down 129.64 points (0.38%) from the previous session. The S&P 500, centered on large-cap stocks, ended the day at 4,349.93, down 6.52 points (0.15%). The Nasdaq, focused on technology stocks, halted its decline just before the close and finished up 2.82 points (0.02%) at 13,542.12.

Although the Nasdaq closed higher, it was near flat, and considering that the Nasdaq is already in a technical correction phase, the market is regarded as weak. The economic media CNBC reported that "the New York stock market has been on a rollercoaster for three consecutive trading days."

Earlier in the day, the market showed strength immediately after the release of the Federal Open Market Committee (FOMC) statement, which signaled a rate hike. This was because the expectation that rate hikes could begin after tapering had already been anticipated. A separate statement regarding balance sheet reduction was also at a fundamental level, having little impact on investor sentiment. Additionally, the earnings effects from Microsoft (MS) the previous day and Tesla, scheduled for the day, contributed to continued bargain buying.

However, the market changed just 30 minutes later when Powell's press conference began. His remarks confirmed concerns about inflation and signals of quantitative tightening. Powell emphasized, "There is quite a bit of room to raise rates without threatening the labor market," and "We will use all available tools to prevent inflation from becoming entrenched." He also mentioned, "The economy no longer requires strong monetary policy support."

In particular, Powell's statement that he would provide additional information on balance sheet reduction at an appropriate time in the future and that "we are ready to adjust the specifics" is widely interpreted as a signal of early quantitative tightening.

By individual stocks, companies that have already reported or are about to report earnings, such as Tesla (2.07%), Nvidia (2.01%), Microsoft (2.85%), and Intel (1.35%), closed higher for the first time in a while. Netflix, which has fallen more than 30% this year alone, slipped 1.83% compared to the previous session.

Government bond yields surged. The benchmark U.S. 10-year Treasury yield rose to the 1.85% range. Reflecting market uncertainty, the Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's "fear index," rose 2.57% to 31.96 compared to the previous session.

International oil prices soared due to geopolitical concerns. On the New York Mercantile Exchange, March West Texas Intermediate (WTI) crude oil prices closed at $87.35 per barrel, up $1.75 (2.04%) from the previous session. Brent crude oil prices surpassed $90 per barrel for the first time in about seven years. This is the first time Brent crude has exceeded the $90 level since October 2014.