[New York Stock Market] US Treasury Yields Fall... Nasdaq Rises 1.29% on Tech Stock Rebound

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Major indices on the U.S. New York stock market closed higher on the 25th (local time), buoyed by gains in technology stocks including Microsoft. Although the market initially fell due to concerns over a global economic downturn caused by expanded COVID-19 lockdowns in China, the New York stock market ultimately ended in positive territory as bond yields slid to around 2.8% amid a flight to safe-haven assets and technology stocks rebounded.

On the day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average rose 238.06 points (0.70%) from the previous close to finish at 34,049.46. The large-cap focused S&P 500 index gained 24.34 points (0.57%) to close at 4,296.12, while the tech-heavy Nasdaq index climbed 165.56 points (1.29%) to end at 13,004.85. The small-cap Russell 2000 index also rose 13.54 points (0.70%) to 1,954.20.

Among individual stocks, the rebound in interest rate-sensitive technology shares was notable. Microsoft rose 2.44% from the previous close, marking the second-largest gain on the Dow. Alphabet, Google's parent company, increased by 2.87%, and Meta closed up 1.56%. Twitter surged 5.66% after announcing in the afternoon that it had accepted a $44 billion acquisition offer from Elon Musk, CEO of Tesla. However, Tesla itself fell 0.70%, breaking below the 1,000-dollar mark again.

Jeff Kilburg, Chief Investment Officer (CIO) at Sanctuary Wealth, said, "This week, the focus is on large technology stocks," adding, "We are seeing capital inflows and reallocations. There are opportunities." Economic media CNBC reported that, buoyed by the rebound in tech stocks, the Nasdaq index, which had entered a bear market last week, has returned to a correction territory 19.8% below its previous peak, while the S&P 500 is 10.8% below its previous high.

This week, earnings reports from major tech companies such as Microsoft, Alphabet, Meta, Apple, and Amazon are scheduled one after another. Approximately 160 companies included in the S&P 500 are expected to announce earnings. JC O'Hara of MKM noted, "This week could be a crossroads for the stock market," closely watching earnings. Coca-Cola, which reported quarterly net income and revenue exceeding market expectations before the opening, closed up 1.06%.

On the other hand, energy stocks showed weakness due to falling international oil prices. Chevron fell 2.16%, ExxonMobil dropped 3.37%, and Marathon Oil slid 3.44%.

Investors paid attention not only to corporate earnings but also to China's COVID-19 lockdown measures and the decline in oil prices. As China implemented lockdowns in parts of Beijing following Shanghai, concerns over a China-driven economic downturn intensified. In particular, worries are mounting that investment sentiment, already weakened by fears of central bank tightening, could worsen further.

Oil prices declined. On the New York Mercantile Exchange, June West Texas Intermediate (WTI) crude oil prices closed at $98.54 per barrel, down $3.53 (3.5%) from the previous close, falling below the $100 mark. This was the lowest closing price since April 11. During the session, WTI briefly slipped to around $95 per barrel.

Jeffrey Halley, an analyst at OANDA, said, "China is the 'elephant in the room,'" explaining, "Fears that lockdowns in Shanghai will be tightened and that Omicron will spread in Beijing unsettled market sentiment today." The "elephant in the room" refers to a major problem that no one wants to mention first due to the risks it might bring.

S?bastien McKay, Multi-Asset Fund Manager at Invesco, stated, "There are concerns that the Federal Reserve's aggressive rate hikes could slow the economy and even lead to a recession," adding, "Supply chain issues are arising due to the war in Ukraine and China's lockdown measures."

U.S. Treasury yields plunged. As investors flocked to safe-haven government bonds, the 10-year Treasury yield briefly fell to 2.76% during the session and is currently trading around 2.8%. Yields move inversely to bond prices.