[New York Stock Market] Rebound with Inflow of Bargain Buying... Nasdaq Up 2.14%

[Image source=Yonhap News]

[Asia Economy Reporter Yujin Cho] On the 7th (local time), major indices on the U.S. New York Stock Exchange rebounded sharply for the first time in a while as bargain buying entered the market.

On that day, the Dow Jones Industrial Average closed at 31,581.28, up 1.40% from the previous session.

The S&P 500, centered on large-cap stocks, rose 1.83% to 3,979.87, and the tech-heavy Nasdaq index closed at 11,791.90, up 2.14%, breaking a seven-trading-day losing streak.

MarketWatch reported that the three major indices posted their largest monthly gain since the 10th of last month.

Large tech stocks at the top of the market capitalization rankings showed a simultaneous sharp rise. Tesla rose 3.38%, while Amazon (2.67%), Alphabet (2.79%), and Microsoft (1.91%) each showed gains around 2%.

Among individual stocks, airline stocks showed remarkable advances. United Airlines shares surged 5.52%, while American Airlines and Delta Air Lines rose 5.07% and 3.33%, respectively.

The upward revision of United Airlines' third-quarter earnings outlook was the driving force behind the rise.

Despite the end of the summer peak season, United Airlines raised its third-quarter revenue forecast, boosting investor sentiment. United Airlines stated that "strong passenger demand continues in September" and that "the company expects to continue to see a strong demand environment."

However, energy stocks were sluggish due to the sharp drop in international oil prices. Chevron fell 1.28%, and ExxonMobil was down 0.85%.

Concerns about an economic recession continue, but the easing of interest rates and oil prices appears to have influenced investor sentiment.

The Federal Reserve's Beige Book, released that day, included an assessment that "the outlook for economic growth remains generally weak."

The Beige Book reported that economic activity has not changed significantly since early July, with some areas showing slight increases in activity. Regarding inflation, it noted that while still high, the rate of increase has somewhat eased.

The Beige Book added that the prevailing view is that inflationary pressures will continue at least until the end of the year.

Investors paid more attention to comments from Lael Brainard, Vice Chair of the U.S. Federal Reserve (Fed), than to the recession concerns contained in the Beige Book.

Vice Chair Brainard reaffirmed that "the central bank will take all necessary measures to curb inflation," boosting investor sentiment.

It is analyzed that Brainard's remarks provided some relief to the market, which is expecting three consecutive giant steps (0.75 percentage point rate hikes) in interest rates.

Brainard emphasized the need to keep interest rates high to control inflation, stating, "The benchmark interest rate needs to go higher," while also noting attention to the "risks associated with excessive tightening." Investors appeared to focus more on the latter.

The sharp drop in international oil prices also raised expectations for easing inflation. October delivery West Texas Intermediate (WTI) crude oil closed at $81.94 per barrel, down 5.7% ($4.94), marking the lowest price since January, and November Brent crude also fell more than 5%.

On the same day, the U.S. Department of Commerce announced that the trade deficit in goods and services for July was $70.6 billion (about 98 trillion won), down 12.6% from the previous month.

The U.S. trade deficit has decreased for four consecutive months, reaching its lowest level in nine months since October last year. The expert forecast compiled by Bloomberg News was a $70.2 billion deficit.

Exports increased by 0.2% to $259.3 billion (about 360 trillion won), breaking the record set in June by a month, while imports decreased by 2.9% to $329.9 billion (about 458 trillion won).

July imports were the lowest in the past five months, with consumer goods imports dropping sharply by 9.8%.

This is analyzed as a result of U.S. retailers reducing goods imports after failing to clear inventory due to decreased demand for goods from U.S. consumers caused by inflation.