[New York Stock Market] Decline Amid Concerns Over Fed Tightening... Nasdaq Plummets Over 2%

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] The New York stock market declined as concerns grew over the Federal Reserve's (Fed) signals of further interest rate hikes. Investor sentiment, which had recently rebounded strongly on expectations that the Fed would shift to cutting rates in the first half of next year, froze again, leading to a downturn.

On the 19th (local time), the Dow Jones Industrial Average closed at 33,706.74, down 292.30 points (0.86%) from the previous session. The S&P 500 index fell 55.26 points (1.29%) to 4,228.48, and the tech-heavy Nasdaq index plunged 260.13 points (2.01%) to 12,705.22.

On a weekly basis, the Dow fell 0.16%, the S&P 500 dropped 1.21%, and the Nasdaq declined 2.62%. The S&P 500 and Nasdaq ended their four-week winning streaks. The New York stock market, which had shown a strong rebound on hopes that the Fed would soon slow the pace of rate hikes and possibly cut rates in the first half of next year, retreated amid warnings that the Fed’s monetary policy shift is still far off.

Following the release of the July Federal Open Market Committee (FOMC) minutes on the 17th, which confirmed the Fed’s tightening stance, hawkish comments from officials such as James Bullard, President of the Federal Reserve Bank of St. Louis, who expressed a preference for a 'giant step' (a rate hike of 0.75 percentage points or more) in September, influenced investor sentiment.

On the same day, Thomas Barkin, President of the Richmond Fed, emphasized maintaining a tightening stance during a press conference, stating, "We are committed to bringing inflation back to the 2% target and will do whatever it takes." With expectations of another significant rate hike, the yield on the 10-year U.S. Treasury note jumped more than 0.1 percentage points from the previous day, nearing the 3% level?the highest since July 20.

Consequently, interest rate-sensitive tech stocks fell sharply, dragging down the overall market. Nvidia dropped 4.8%, Meta, Facebook’s parent company, fell 4.0%, Tesla declined 2.5%, and Microsoft decreased 1.5%.

Major meme stocks also continued to plunge. Bed Bath & Beyond (BB&B), which had surged more than fourfold since August, fell nearly 20% the previous day and then plunged an additional 40.5% after news that prominent activist investor Ryan Cohen had sold all his shares in the company, leading the index decline. GameStop and AMC Entertainment also fell 3.8% and 6.6%, respectively.