[New York Stock Market] Around 3% Rise on Falling Treasury Yields... Dow Recovers 30,000 Level

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Major indices on the U.S. New York Stock Exchange closed higher on the 4th (local time), supported by a decline in Treasury yields and bargain buying. The Dow Jones Industrial Average, composed of blue-chip stocks, reclaimed the 30,000 level. However, with ongoing downward pressure from the Federal Reserve's (Fed) aggressive tightening, many analysts believe the recent rally will remain a short-term bounce within a bear market.

At the New York Stock Exchange (NYSE) that day, the Dow closed at 30,316.32, up 825.43 points (2.80%) from the previous session. The large-cap S&P 500 index rose 112.50 points (3.06%) to 3,790.93, and the tech-heavy Nasdaq index gained 360.97 points (3.34%) to close at 11,176.41. The small-cap Russell 2000 index also finished higher at 1,775.77, up 66.90 points (3.91%). This marks the first time the Dow has reclaimed the 30,000 level since September 22.

Among individual stocks, travel-related shares showed notable strength. Leading cruise stock Royal Caribbean surged 16.65% compared to the previous close. Carnival rose 13.28%, and Norwegian Cruise Line soared 16.84%. Delta Air Lines and American Airlines also recorded gains in the 8% range. Energy stocks such as ExxonMobil (+3.64%) and Chevron (+3.89%) rallied amid rising international oil prices. Technology stocks including Meta (+1.20%), Alphabet (+3.04%), Apple (+2.56%), Amazon (+4.50%), and Nvidia (+5.23%) all closed higher.

Twitter surged more than 22% following reports that Tesla CEO Elon Musk decided to proceed with the original acquisition agreement. Trading was halted for several hours during the session. The closing price was $52 per share, below Musk’s proposed acquisition price of $54.20. Tesla pared gains to close up 3.38% on the news.

Additionally, online secondhand marketplace Poshmark jumped 13.10% on news of its acquisition by Naver. Competitors The RealReal and ThredUp also soared 16.67% and 16.02%, respectively. Rivian rose nearly 14% after reporting a 67% increase in third-quarter production compared to the previous quarter. Micron closed up 4.33% following an announcement to invest up to $100 billion (approximately 142.8 trillion KRW) in building a large-scale semiconductor factory in New York.

Investors that day focused on Treasury yields, a strong dollar, the Fed’s future moves, and recession concerns. In the New York bond market, the yield on the 10-year U.S. Treasury note fell slightly to 3.63%, dipping as low as 3.56% during the session. After rising to 4% last week, the 10-year yield has been declining steadily, improving market sentiment.

The U.S. dollar also showed weakness for the fifth consecutive day. The dollar index, which measures the dollar’s value against six major currencies, dropped from a recent high of 114.78 following the UK’s tax cut announcement last week to around the 110 level. CNBC noted, "One factor supporting the stock market today is the dollar’s fifth consecutive day of decline."

Economic data released that day confirmed growing signs of cooling in the labor market. According to the U.S. Department of Labor’s JOLTs (Job Openings and Labor Turnover Survey), job openings in August fell about 10% from 11.17 million to 10.053 million, missing market expectations of 11.1 million. This nearly 1.1 million monthly drop in job openings is the first since the early days of the COVID-19 pandemic. Julia Pollak, Chief Economist at JobRecruit, said, "This downward trend is expected to continue, especially in industries sensitive to inflation, stock declines, and economic contraction."

Some market participants are also seeing renewed expectations for central banks to slow their pace of rate hikes after the Reserve Bank of Australia (RBA) raised rates by less than expected. Ipek Ozkades Kaya, Senior Analyst at Swissquote Bank, evaluated that the U.S. ISM manufacturing index released the previous day showed slower-than-expected expansion, signaling to many investors that the Fed’s aggressive tightening may not continue indefinitely.

However, the Fed is still widely expected to raise rates by 0.75 percentage points at its November meeting. According to the Chicago Mercantile Exchange (CME) FedWatch tool, federal funds futures markets price in over a 66% chance of a "giant step" (0.75 percentage point hike) next month. In fact, bets on a giant step have increased compared to the previous day.

Market experts anticipate continued high volatility for the time being. Mark H?fele, Chief Investment Officer (CIO) at UBS Global Wealth Management, recently described the New York stock market as oversold and expects periodic rebounds. However, he added, "Expect short-term volatility to persist due to inflation and policy rate expectations." Holly Newman Croft, Advisor at Neuberger Berman, said the current rebound "is no different from the summer rally" and predicted that "the market will not recover until the Fed signals a pause in rate hikes."

Oil prices rose ahead of the scheduled oil-producing countries’ meeting on the 5th. On the New York Mercantile Exchange, November West Texas Intermediate (WTI) crude oil closed at $86.52 per barrel, up $2.89 (3.46%) from the previous session. Bloomberg reported that OPEC+ producers are considering cuts of up to 2 million barrels per day. Earlier, the Wall Street Journal (WSJ) also cited sources saying they are pushing for at least a 1 million barrel per day cut.