[New York Stock Market] Nearly 3% Surge Amid Eased Inflation Concerns... Viewed as a 'Temporary 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 24th (local time) as inflation fears, which had driven the recent downturn, slightly eased. The S&P 500 index, representing the New York stock market, turned to an upward trend for the first time in four weeks. However, Wall Street still pours out gloomy forecasts. The weekly rebound is also seen as only a temporary bounce in a bear market.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 31,500.68, up 823.32 points (2.68%) from the previous session. The large-cap-focused S&P 500 index ended at 3,911.74, up 116.01 points (3.06%), and the tech-heavy Nasdaq index closed at 11,607.62, rising 375.43 points (3.34%). The small-cap-focused Russell 2000 index also finished at 1,765.73, up 54.06 points (3.16%).

All 11 sectors of the S&P 500 showed gains. Financial stocks notably led the rally. This rally followed the release of the Federal Reserve's stress test results, confirming that major U.S. banks have sufficient capital to withstand severe recessions. Wells Fargo closed up 7.57% from the previous session. JPMorgan Chase rose 2.98%, and Goldman Sachs increased by 5.79%.

Travel-related stocks such as airlines and cruise lines also showed strong gains. Carnival surged 12.44% after reporting that quarterly bookings had doubled. Royal Caribbean and Norwegian Cruise Line each recorded gains in the 15% range. Delta Air Lines rose 5.55%, United Airlines 7.54%, and American Airlines Group 7.09%.

Tesla rose more than 4% despite Credit Suisse lowering its target price from $1,200 to $1,000 per share. Meta and Netflix jumped 7.19% and 5.03%, respectively, ahead of their inclusion in the Russell 1000 Value Index following the FTSE Russell stock index rebalancing.

Chris Senyak of Wolfe Research described it as a "bear market rally due to oversold conditions." The S&P 500, which had its worst week since 2020 just a week ago, rose 6.5% this week. The Dow rose 5.4%, and the Nasdaq gained 7.5%.

Investors continued to watch key economic indicators amid recession concerns. The revised University of Michigan Consumer Sentiment Index for June was 50.0, marking an all-time low. The 12-month expected inflation rate was 5.3%, slightly down from the preliminary 5.4%. Economic media CNBC reported that despite weak indicators, the stock market surged after the slight easing of expected inflation.

New home sales in the U.S. increased in May for the first time in five months. The U.S. Department of Commerce announced that new home sales in May rose 10.7% month-over-month to an annual rate of 696,000 units, far exceeding market expectations of 587,000 units.

The Fed's tightening stance and resulting recession concerns persist. James Bullard, president of the Federal Reserve Bank of St. Louis and a noted hawk, said in a panel discussion that he wants to see the benchmark interest rate rise to 3.5% by the end of this year, and that the market has already priced this in. However, regarding recession concerns, he acknowledged the possibility of slower growth but drew a line against a recession.

As the Fed clearly signaled additional rate hikes to curb soaring inflation, the 10-year U.S. Treasury yield rose to 3.134% in the New York bond market. The previous day, Fed Chair Jerome Powell reaffirmed his "unconditional" commitment to tackling inflation.

Market experts widely regard this week's gains as a temporary rebound in a bear market. Jeffrey Halley, senior analyst at OANDA, said, "It appears to be the result of bargain hunting in stocks and bonds, inherently learned through 20 years of central bank support," adding, "It may be a bear market correction."

Oil prices rose alongside the stock market movement. On the New York Mercantile Exchange, August West Texas Intermediate (WTI) crude oil closed at $107.62 per barrel, up $3.35 (3.21%) from the previous session.