[New York Stock Market] Mixed Close Amid Sharp Rise in Treasury Yields... S&P 500 Hits New Year-to-Date Low Again

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Major indices of the U.S. New York stock market closed mixed near the flat line on the 27th (local time). The early confirmed bargain buying lost momentum due to consecutive hawkish remarks from Federal Reserve (Fed) officials and concerns over economic slowdown. The S&P 500 index, centered on large-cap stocks, hit a new year-to-date low after just one day, falling deeper into bear market territory, while the long-term benchmark U.S. 10-year Treasury yield soared, approaching the 4% mark.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 29,134.99, down 125.82 points (0.43%) from the previous session. The S&P 500 index ended the day at 3,647.29, down 7.75 points (0.21%). In contrast, the tech-heavy Nasdaq index rose 26.58 points (0.25%) to close at 10,829.50.

The closing price of the S&P 500 on this day was about 24% lower than its peak in January. The Dow is down 21% from its high, and the Nasdaq has fallen more than 33%.

By sector, all 11 sectors showed a general decline. However, some leading tech stocks rose, supporting the Nasdaq. Tesla rose 2.51% from the previous close. Apple and Nvidia increased by 0.66% and 1.51%, respectively. International oil prices rebounded after three trading days, lifting ExxonMobil (+2.10%) and Occidental Petroleum (+1.12%).

Rental car company Hertz rose 4.42% after announcing a partnership with British energy company BP to build an electric vehicle charging network across its U.S. locations. Lucid jumped 2.49% after investment firm Canter Fitzgerald upgraded its investment rating. On the other hand, Ford Motor Company fell 0.67% after announcing a $700 million new investment in Kentucky and the creation of 500 additional jobs.

Investors monitored the ongoing turmoil in the UK financial market, movements in Treasury yields, and remarks from Fed officials that began the previous day. The New York stock market, which started higher due to rebound buying amid the recent sharp decline, lost momentum as concerns over high-intensity tightening by the Fed and other central banks and economic slowdown spread. Art Hogan, strategist at B. Riley Financial, said, "There is still concern that the Fed might excessively push the economy into a recession."

The market also digested a series of hawkish comments from Fed officials. Following Boston Fed President Susan Collins, Atlanta Fed President Raphael Bostic, and Cleveland Fed President Loretta Mester, who emphasized inflation easing as a priority and suggested prolonged tightening, St. Louis Fed President James Bullard, Chicago Fed President Charles Evans, and Minneapolis Fed President Neel Kashkari spoke on this day.

President Bullard stated that the Fed should raise rates to 4.5% by the end of the year and maintain that level for some time. President Evans mentioned that his rate forecast generally aligns with the Fed members' median rate projections. The previously released median rate projections are 4.4% by the end of this year and 4.6% by the end of next year. However, in an interview with CNBC, President Evans also expressed some concern about investors' fears that rate hikes might occur too rapidly.

President Kashkari acknowledged the risk of the Fed over-tightening policy but evaluated the current tightening as appropriate. Additionally, Fed Chair Jerome Powell attended an event hosted by the Bank of France and spoke about regulations on stablecoin issuers but made no specific comments regarding monetary policy.

With expectations that high-intensity tightening will continue, the U.S. 10-year Treasury yield surged to 3.992% intraday, nearing 4%. According to FactSet, the last time the 10-year yield was in the 4% range was in 2008. The 2-year yield, which is sensitive to monetary policy, hovered around 4.3%.

The U.S. economic indicators released on this day were mixed. Durable goods orders in August decreased for the second consecutive month. The Conference Board's September Consumer Confidence Index (108) exceeded market expectations, reaching the highest level in five months.

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's "fear gauge," rose more than 1% from the previous session, trading around 32.6.

Lauren Godwin, economist at New York Life Investments, analyzed, "Leading economic indicators will continue to decline until they hit bottom. We are not there yet, and volatility in risk assets will appear."

The dollar slightly rose, continuing its rally. The Dollar Index, which measures the value of the dollar against six major currencies, remained around 114.

Oil prices rebounded after three trading days as Hurricane Ian approached, causing oil producers in the Gulf of Mexico to halt operations. On the New York Mercantile Exchange, November West Texas Intermediate (WTI) crude oil prices closed at $78.50 per barrel, up $1.79 (2.33%) from the previous day.