[New York Stock Market] Mixed Ahead of Powell's Speech and Indicators... Nasdaq Down 0.59%

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Major indices on the U.S. New York Stock Exchange closed mixed on the 29th (local time) as investors remained cautious ahead of this week’s economic data releases and Federal Reserve (Fed) Chair Jerome Powell’s speech.

On the day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 33,852.53, up 3.07 points (0.01%) from the previous session. In contrast, the large-cap S&P 500 index fell 6.31 points (0.16%) to 3,957.63, and the tech-heavy Nasdaq index dropped 65.72 points (0.59%) to 10,983.78.

Ross Mayfield, investment strategy analyst at Baird, said, "The market is barely moving as investors await Chair Powell’s speech, the employment report to be released later this week, and inflation data," adding, "It’s a very important week for economic data."

Among individual stocks, the weakness in technology shares was notable. Apple closed down 2.11% amid concerns over reduced iPhone Pro production due to renewed COVID-19 lockdowns in China. Tesla fell 1.14%, Amazon dropped 1.63%, and Nvidia declined 1.19%.

On the other hand, Chinese stocks listed in New York rallied after Chinese health authorities announced plans to expand vaccination efforts for the elderly. Alibaba and JD.com shares rose 5.25% and 6.69%, respectively. Didi Global (+9.86%), Pinduoduo (+5.91%), Tencent (+6.11%), and Nio (+3.75%) also climbed together.

Additionally, Chinese internet company Bilibili surged more than 22%, exceeding expectations with its earnings. Sports retailer Hibet slid over 11% due to weak performance.

Investors on the day remained cautious, monitoring China’s COVID-19 situation while awaiting key economic indicators and official statements that could help assess the current economic environment.

On December 1, the Fed-watched inflation gauge, the PCE Price Index, the U.S. October JOLTS (Job Openings and Labor Turnover Survey) report, and the November ISM Manufacturing PMI will be released. The U.S. November employment report is also scheduled for December 2. Prior to these, Chair Powell will deliver a speech on the 30th at an economic outlook and labor market event hosted by the Brookings Institution. Investors are closely watching for economic assessments and hints on future monetary policy from this speech.

Bill Noday, senior director at US Bank, assessed, "The market’s focus has shifted from the Q3 earnings season to additional factors that could influence the Fed’s December decision." The November Consumer Confidence Index released that day recorded 100.2, lower than the previous month but slightly above market expectations. U.S. home prices fell for the third consecutive month. The S&P CoreLogic Case-Shiller Home Price Index dropped 1.0% month-over-month in September.

Recently, China’s COVID-19 situation has become another variable for the stock market. Protests have continued in major cities such as Beijing, Shanghai, and Wuhan, raising concerns about the global supply chain. However, Chinese health authorities’ announcement to expand vaccinations for the elderly has raised hopes for a near-term easing of quarantine standards. The fact that new COVID-19 cases in China have turned to a declining trend compared to the previous day was also seen as a positive factor.

Ricardo Evangelista, senior analyst at ActivTrades, evaluated, "This announcement came after unprecedented protests against President Xi Jinping and is the first sign that Chinese authorities may consider easing lockdown restrictions." However, some criticism argues that such expectations are premature. Esti Dwek, Chief Investment Officer (CIO) at FlowBank, pointed out, "The market hopes this will lead to the end of the zero-COVID policy, but it is premature."

Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), said in an interview with the Associated Press on the same day, "China needs to recalibrate its zero-COVID policy to precisely target confirmed cases for isolation on a case-by-case basis, considering the impact on people and the economy."

In the New York bond market that day, U.S. Treasury yields rose. The 10-year Treasury yield increased by 4 basis points to 3.746%. The 2-year Treasury yield, sensitive to monetary policy, stood at 4.48%. The yield curve inversion, where the 10-year yield falls below the 2-year yield, reached its widest gap in decades. Typically, such an inversion is considered a precursor to a recession. However, the Wall Street Journal (WSJ) reported that this inversion might reflect expectations of easing inflation rather than signaling an impending recession.

Oil prices rose ahead of the oil-producing countries’ meeting scheduled for December 4. On the New York Mercantile Exchange, January West Texas Intermediate (WTI) crude futures closed at $78.20 per barrel, up 96 cents (1.24%) from the previous day. With concerns over China’s COVID-19 lockdown easing somewhat alleviated, there are expectations that the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil producers, known as ‘OPEC+,’ will decide on additional production cuts. Goldman Sachs forecasted that oil-producing countries’ additional measures to curb the price decline could push next year’s international oil prices to $110 per barrel based on Brent crude.