[New York Stock Market] On the First Trading Day of October, All Stocks Rise Over 2% Amid Decline in Treasury Yields

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] The U.S. New York stock market rallied on the 3rd (local time) as it began a new month and quarter. The British government decided to withdraw part of the tax cut plan that had previously thrown the market into uncertainty, causing bond yields to fall and a rebound buying trend to be confirmed in the stock market.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 29,490.89, up 765.38 points (2.66%) from the previous session. The large-cap focused S&P 500 index rose 92.81 points (2.59%) to 3,678.43, and the tech-heavy Nasdaq index closed up 239.82 points (2.27%) at 10,815.44.

The major indices of the New York stock market started October's first trading day on an upswing due to rebound buying following a sharp decline throughout September. In September alone, the Dow fell 8.8%, the S&P 500 dropped 9.3%, and the Nasdaq declined 10.5%. On a quarterly basis, the Dow decreased 6.6%, the S&P 500 fell 5.28%, and the Nasdaq dropped 4.11%.

Sam Stovall, Chief Investment Strategist at CFRA, said, "Monday's (3rd) rally is not surprising considering how oversold the market had been."

By sector, all sectors of the S&P 500 closed in the green, with energy stocks standing out thanks to rising international oil prices. ExxonMobil jumped 5.28% from the previous session. Chevron rose 5.61%, Occidental Petroleum increased 4.25%, and Marathon Oil surged over 10%. Semiconductor stocks, which had been declining amid recession concerns, also rallied, with Intel (+4.66%), Nvidia (+3.07%), and AMD (+4.34%) showing gains.

Leading tech stock Tesla closed down 8.61% due to third-quarter vehicle delivery results that fell short of market expectations. Microsoft, Apple, and Alphabet each recorded gains in the 3% range. Credit Suisse, whose stock had plunged due to financial soundness concerns, rose more than 2% on the day. Peloton closed up 7.79% following an announcement that it will install bikes in 5,400 Hilton-affiliated hotels across the U.S.

Investors particularly focused on movements in bond yields, international oil prices, economic indicators, and statements from Federal Reserve (Fed) officials.

In the New York bond market on this day, the yield on the U.S. 10-year Treasury note fell from 3.802% last Friday to 3.65%. The 2-year yield, sensitive to monetary policy, also slid to around 4.10%.

The U.S. 10-year yield, which had surpassed 4% last week, declined after the British government announced it would not pursue the controversial plan to abolish the 45% top income tax rate within its tax cut policy, easing uncertainty. The pound sterling slightly appreciated, while the U.S. dollar weakened. The dollar index, which measures the dollar's value against six major currencies, dropped to around 111.

Economic indicators were mixed. The final reading of the U.S. manufacturing Purchasing Managers' Index (PMI) for September, released by S&P Global (seasonally adjusted), was 52.0, indicating continued expansion. This was slightly higher than the preliminary figure of 51.8 and the previous month's 51.5. Conversely, the Institute for Supply Management (ISM) manufacturing PMI fell from 52.8 in August to 50.9 in September, confirming weakness in manufacturing activity.

Despite the rally, concerns about market uncertainty persist. Citi lowered its year-end S&P 500 forecast from 4,200 to 4,000 and projected 3,900 for the end of next year. Citi also estimated a 60% chance of a mild recession in the U.S. in the first half of next year. Credit Suisse (CS) also cut its year-end forecast to 3,850, about 10% lower than before.

Carsten Brzeski, Global Macro Research Team Leader at ING Group, said, "There are too many simultaneous tensions and crises hitting the market, causing significant volatility and uncertainty."

Concerns about recession due to the Fed's and other central banks' aggressive tightening continue. The United Nations Conference on Trade and Development (UNCTAD), a UN agency, warned in its annual international economic outlook report released on this day that central bank rate hikes are severely impacting low-income countries and pushing the global economy toward recession.

The report estimated that a 1 percentage point increase in the Fed's benchmark interest rate would reduce GDP by 0.5% in other advanced economies and 0.8% in developing countries over the following three years. It also projected that ongoing Fed rate hikes this year would reduce developing countries' GDP by $360 billion over the next three years. UNCTAD further argued that since recent inflation is driven by supply-side issues, rate hikes aimed at suppressing demand cannot effectively control it.

However, John Williams, President of the New York Federal Reserve Bank, said in a speech on this day, "The Fed's efforts to slow demand through mortgage rates and stock market declines are having some effect," and emphasized the need to maintain high rates for a longer period to achieve the inflation target. The U.S. central bank, the Fed, has implemented aggressive rate hikes starting with 0.25 percentage points in March, followed by 0.5 points in May, 0.75 points in June, 0.75 points in July, and 0.75 points in September this year.

International oil prices surged more than 5% as expectations grew that oil-producing countries would implement large-scale production cuts at the regular meeting scheduled for the 5th. On the New York Mercantile Exchange (NYMEX), November delivery West Texas Intermediate (WTI) crude oil closed at $83.63 per barrel, up 5.2% ($4.14) from the previous session. This was the largest daily gain since May 11 and the highest closing price since September 20.

Gold prices rose. On the New York Commodity Exchange, December delivery gold closed at $1,702 per ounce, up 1.8% ($30).