[New York Stock Market] Despite FOMC End and Growth Rate Boost... All Fall, Nasdaq Down 1.40%

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] The U.S. New York stock market closed lower across the board on the 27th (local time), the day after the Federal Open Market Committee (FOMC) regular meeting. Although the FOMC results partially removed uncertainty about monetary policy and a Gross Domestic Product (GDP) indicator showed that the U.S. economy grew at the fastest pace in 37 years, it is evaluated that this was insufficient to support a market shaken by anxiety.

On that day, the Dow Jones Industrial Average closed at 34,160.78, down 7.31 points (0.02%) from the previous session. The large-cap-focused S&P 500 index fell 23.42 points (0.54%) to 4,326.51, and the tech-heavy Nasdaq index closed at 13,352.78, down 189.34 points (1.40%).

After the Federal Reserve's FOMC concluded and the market opened, the New York stock market started on an upward trend as economic indicators such as GDP, released in the morning, came out better than market expectations.

According to the U.S. Department of Commerce, the annual GDP of the United States increased by 5.7% last year. This is the largest growth rate since 7.2% in 1984. Despite the spread of COVID-19, government fiscal spending and the financial authorities' ultra-loose monetary policy were evaluated to have been effective. The GDP growth rate for the fourth quarter of last year was also 6.9%, continuing a positive streak for six consecutive quarters. On the same day, the number of new unemployment claims in the U.S. also turned to a downward trend.

However, despite these positive indicators, the rollercoaster market continued due to concerns over early tightening by the Fed and deteriorating investor sentiment surrounding corporate earnings. The Dow Jones index, which rose more than 600 points at one point during the day, could not avoid a downward trend as the market close approached.

In particular, concerns about early tightening resurfaced as the market widely interpreted Federal Reserve Chair Jerome Powell's press conference remarks from the previous day as more hawkish than expected. The 10-year U.S. Treasury yield fell to around 1.80%. The 2-year U.S. Treasury yield, sensitive to monetary policy, surged to 1.2% at one point during the day. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's "fear index," hit 33 at one point during the day before falling back to the high 30s.

By stock, the shock to interest rate-sensitive tech stocks continued that day as well. Tesla, which announced strong earnings the previous day, fell 11.55% from the previous close, breaking below the 900 level. It is evaluated that mentioning supply chain issues during the conference call increased market anxiety. Intel also saw its stock price drop by 7.04%. Nvidia fell 3.64%, and Apple and Robinhood, which were scheduled to release earnings after the market close, saw their stock prices fall by 0.29% and 6.45%, respectively.

On the other hand, Netflix, which had fallen more than 30% this month, rebounded more than 7% after news emerged that billionaire investor Bill Ackman had purchased shares. Pfizer closed up 1.44% from the previous session after news spread that the European Medicines Agency (EMA) recommended conditional approval for the oral COVID-19 treatment ‘Paxlovid’.

Economic media CNBC reported, "The New York stock market is showing great volatility this week, displaying a rollercoaster market." The Dow Jones index showed sharp volatility, falling more than 1,000 points at one point during the week, but the media added that based on closing prices, it was down only 0.3%. The S&P 500 index fell 1.6%, and the Nasdaq index dropped more than 3% this week. The Nasdaq index has fallen more than 15% from its peak, entering a technical correction phase. Tim Grieski, Senior Portfolio Strategist at Ingalls & Snyder, said, "It is a time of great uncertainty," adding, "It has been so throughout January."

Oil prices fell slightly. On that day, the March West Texas Intermediate (WTI) crude oil price on the New York Mercantile Exchange closed at $86.61 per barrel, down $0.74 (0.85%) from the previous session. However, the WTI price was the fourth highest this year based on the closing price. Geopolitical risks have increased due to the possibility of Russia's invasion of Ukraine, putting upward pressure on oil prices. In the afternoon, U.S. President Joe Biden and Ukrainian President Volodymyr Zelenskyy held a call regarding Russia's troop buildup near the Ukraine border.