[New York Stock Market] Fed Reaffirms Commitment to Price Stability... Nasdaq Up 0.35%

[Image source=Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Major indices of the U.S. New York stock market on the 6th (local time) closed slightly higher and traded near the flat line after the Federal Reserve (Fed) reaffirmed its intention to continue raising the benchmark interest rate to curb soaring inflation.

On that day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 31,037.68, up 69.86 points (0.23%) from the previous session. The S&P 500, centered on large-cap stocks, rose 13.69 points (0.36%) to 3,845.08, and the Nasdaq, focused on tech stocks, increased by 39.61 points (0.35%) to 11,361.85.

By sector, energy stocks showed weakness due to falling oil prices. ExxonMobil fell 1.80% from the previous close. Devon Energy also slipped 1.72%. Marathon Oil (-2.13%), Schlumberger (-1.80%), and Chevron (-1.32%) also showed declines.

On the other hand, major tech stocks such as Apple (+0.96%), Nvidia (+1.11%), Meta (+0.94%), and Microsoft (+1.28%) rose. Northrop Grumman increased by 3.77%, and UnitedHealth Group rose 1.99%.

The market closely watched the Fed's June Federal Open Market Committee (FOMC) minutes released that day, along with concerns about a recession and movements in Treasury yields.

After the Fed stated in the minutes that "all participants agreed that moving toward a restrictive policy stance is appropriate given the economic outlook," stock prices rose. Economic media CNBC reported, "This shows that the central bank is doing its best to lower inflation," and added, "The Fed has also signaled a 0.5 to 0.75 percentage point increase at the July meeting."

In the New York bond market, the yield on the U.S. 10-year Treasury rose to around 2.93%. The 10-year yield, which had fallen to around 2.8% the previous day, rose again as the Fed reaffirmed its plan to raise rates by 0.5 to 0.75 percentage points at the July FOMC. However, the 2-year yield, which is more sensitive to monetary policy, surged further, causing an inversion where short-term rates exceeded long-term rates. This inversion of short- and long-term yields is generally considered a precursor to a recession, fueling market concerns.

Chris Osmond of Centura Wealth Advisory said, "We are witnessing a chicken game between growth and inflation," adding, "Ultimately, both will reverse, but which one reverses first will be the most important factor going forward."

The U.S. Institute for Supply Management (ISM) reported that the June Services Purchasing Managers' Index (PMI) was 55.3, the lowest level since May 2020. However, it remained above the baseline of 50, indicating continued expansion. The Department of Labor reported 11.3 million job openings in May, down from the previous month but exceeding market expectations.

Oil prices continued to weaken amid ongoing recession concerns, following the previous day’s trend. On the New York Mercantile Exchange, August West Texas Intermediate (WTI) crude oil closed at $98.53 per barrel, down 97 cents (0.97%) from the previous session. Brent crude on the London ICE Futures Exchange briefly fell below the $100 per barrel mark during the session.